Competition Commission of India
Shri Praveen Kumar Sodhi vs Omaxe Ltd. & Ors. Main Order, Per R. ... on 21 February, 2012
BEFORE COMPETITION COMMISSION or INDIA Case No. 83/2011 Date of Order -- 21.02.2Q1V2;__ In. Re: 2 , V - TTTTT O 0 Shri Praveen Kumar Sod.hi Informant Vs. 1. Omaxe Limited Opposite Party No, 1 2. Shri Rohtas Goel Opposite Party No', 2 Chairman and Managing Director 2 Qjn1a__xe Liinite iS1gni1 Goel Opposite Party No. 3r__p 9' _ _ Eiteciltive Director if 2 it Limited 4. Shir J ai Bhagwan Goel Opposite Party N034 "H Executive Director I O H Omaxe Limited As per R. Prasad (Dissenting) Order under section 26(1) of the Competition Act. 2002
The facts of the case and the allegations made by the informant are already discussed at length in the Order being passed by the Cominission under Section 26(2) of the Competition Act , 2002 and thus, there is no need pto»reprod}1e§;\1;h"'e~:ws,\ame here. However, the facts in 'brief are that the informant '<;:~°' <"\-">3 ' ' " . _'~, A 'tmg . .«/at / 3&1 ent Indian and has booked a 3'_BHK apartment of 160 'Rich1n0nd' tower in the Page 1 of 7 0? r'V .
F") ivhousing Project launched by OPS namely, "Omaxe Hills" in Faridabad (Haryana) in February 2005.
For the same, the informant _ has paid 15.20 lakh in two installments to the opposite party. The opposite party confirmed the allotment of3?tlie--- residential--- flats beariiigiéno 12.09.2006 and convinced the informant that the project will be completed in 2010 and the flat shall be hand over to him. However, the celled the planned to allot some different another tower namely 'Windsor'. informant has come to know that the opposite party had can allotment of flat no. 604 and flat in The informant has alleged that this willfi.1l cancellation is arbitrary in _r}atL1re and damaged and restricted the rights of the;.»inf5l A if is abuse of dominance by the opposite party i 0 Cfiinp Competition Act, 2002 and thus is imposing unreasonable 1 'estrictions on the informant to purchase the flat not of its choic :e but by compulsion.
FINDINGS .
I have carefully examined the information, the documents filed along with the information and all other related aspects of this case. The counsel of the Informant was during the proceedings under ;;&4}\ . o v section 26 of the Act. In 1 _ i 'there exists a prima fa cie case of 3 the Act in the *' -r-':00;
contravention of section 4 Page 2 of 7 ;;5@4,¢h;l..l present case on following grounds:--
1, OPS enjoy a position of strength in the relevant market in explanation (a) to Section 4 as they are in such a positi enables them to forces H prevailing in the market and to affect its consumers in its so happens when a consumer enters into an agreement such builders, it becomes impossible for the c;,onsumer 1 of that agreement because of huge switching cost have and this gives the builders a position of strength whi them to operate independently of its competitors as the cannot switch over to other competitors. This position 0 acquired by way of agreement also enable V"
consumers as the consumers become captive aft' terms of >11 cswhish favour. It with any :0 get out lved in it Oh enable consumer
--~----agreemen_t. The agreements are always loacT'e"_d*""in.ifaw builder and usually contain unfair and discriininatory conditions. Once the customers become captive, the builders start fleecing them. I have already held in the case of DLF that this conduct is called "after market abuse." Thus, this is a fit case of abuse of dominance by the OPS. a dominant position in the relevant market. Though thi stage Where relevant market needs to be determined facie the relevant market in this case is "provision of development of residei1t°.al§7%:f'i§;T' .3.
Faridabad district of H market in this case is . The only thing required to be proved is that the buildei r is holding ,s isnot the , yet prima services for 'n the geographic area of ' the relevant geographical t iijxportant to see whether the Page 3 of 7 r in Richmond) is not substitutable or intercliangeable as , Otherwise also, OP is a well known player in the field of Rea} cts in the . So far the question of violation of section if OP is a dominant player in that area. According to me project i.e. "Omaxe Hills" in Faridabad launched by constitutes one relevant market as this particular produc a relevant market.
Estate construction and has a number of other proje country. It has also got substantial market share in th market share thought by virtue of the market share it can] that the OP is the only dominant player in the relevant n the entire I the OP t (the flat squired in.
Le relevant lot be said .1arke;t but of course it is one of the dominant players in the relevaiit" P practices being followed by the OP as Well L a_,re;p_ quite common and prima facie anti-competitive. These-iipractices. may be of various type and some of them are given below:
a) Advertisements are issued for launching pr application and initial deposits are received. by 1 without the necessary approvals or registrations the project land;
b) The terms and conditions indicated for attrac often contain misleading statements and commitments by the builders;
c) The terms of the X~ 1 /l S. 'Y0 z I' O6 .9 wt» oj ects and ;he builders required for ting buyers unattainable re often one sided leaving the /E; in the matter and include uilders to change the area, Page 4 of 7 O design and other major aspects of the project unilaterally, (ii) .
require forfeiture of large amounts in certain cases mc1ud;'mg exit by buyers; (iii) provide for little commitment tg complete thewprojectsi in a time bound manner; "(iv high penal interest rate from buyers for late payment etc.; and (V) impose excessive maintenance charges. cl) Non transparent method of accounting as the collected _ amounts are often diverted to other projects; and
e) Builders retaining rights over common area despiteichargging the full cost from the buyers as part of the total project; cost including 1
5. Further, it is also in the knowledge of the builders do not disclose documents relatingiito tg property before signing the flat buyer agreeinent; _ are quoted for bui1t--up area and super built--up area;.collection of 10-20% of the cost of the flat in the form of booking amount 'without diverging the project details; providing of buyer's agreements only after the prospective buyer is locked in by payment of booking amount. Further, it appears that such agreements include several onerous and one sided terms favoring the builder including a provision for mandatory purchase of car parking which is separately charged for even though parking areas are included in common areas and facilities; compelling the buyer to pay the taxes levied why" the authority even during the ownership of the pr 'ect to banks; Page 5 of 7 5 charge a9 - ~ a floor plans.
_ Under section 3(1) of the Act, no e financial institutions by the builders to raise the funds ev the property is simultaneously sold to the buyers and re the right by builder; developer to alter/ delete/ modify I agreement in respect of production, supply, distributio acquisition or control of goods or provision ofservi causes or is likely to cause an appreciable adverse competition Within India. Any agreement enterec en though serving of building and nterprise or association of enterprises or person or association of persons shall ent er into any in, storage, ses, which A effect on :1 into in contravention of the provisions contained in su section 3 of the Act shall be void as per the p in sub--section (2) of section 3 of the Act. between enterprises or associations of enterprises or associations of persons or between any person and er practice carried on, or decision taken by, any ass enterprises or association of persons, including cartels, identical or similar trade of goods or provision of serv (21) directly or indirectly determines purchase or sale limits or» controls production, supply, development, investment or provision of services; (c markets, ) market or source of production or provision of service persons or iterprise or ociation of engaged in ices, which prices; (b) technical shares the s by way of allocation of geographical market, or type of goods or services, or number 0 the market or any other ' A': "5 similar way; (d) dire MO results in bid rigging or Page 6 of7 collusive bidding, shall be presumed to have an a}:
adverse effect on competition.
eful peru View ofothg §tl29:z_<.z13_1.iQVi.SiQI1Sr_ ?£1}d On 3 Car ' informations filed in this case, the Various practices being at tha OPS prima facie appear to be anti-competitive. Thus, I am of the opinion that there exists a prima fac matter and to submit his report within a period of 45 days communication of this order.
ofthe DG in terms of the relevant provisiontdioo ;.t__ " t' final expression of opinion on the merits of the cas L in iobserxfations made herein shall not direct the Director General (DG) to cause an investigatiori éjjhe Secretary is directed to send a copy of the:,.inf'orri&iiat' "
It is clarified that nothing stated in this order shall tani ppreciable sale of? the iopted by 're case to into the Al frorri the tamoiiht" to e and the affect the investigations in any 9'?
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Sci "2/v\'V E i "9 i / I :9' M "V "W ' £12'
-#4 P. CSfi\l*il_.:'--\U§ SVSTANT DIRECTOR l .
eliuon Commission 0i 'W3 New Delhi Mamba 3r (R)