Real estate companies exonerated in alleged anti-competitive practices charges
By its February 5 2015 order the Competition Commission exonerated 24 real estate companies for alleged cartelisation primarily due to insufficient evidence.(1) Shri Jyoti Swaroop Arora filed information with the commission in Shri Jyoti Swaroop Arora v Tulip Infratech Ltd, which also included the Confederation of Real Estate Developers' Association of India (CREDAI) and real estate firms such as Amrapali, Ansal, BPTP, Omaxe, Oberoi Realty, Parsvnath Developers, Puravanakara, Supertech, Unitech and Tata Housing Development Company.
While the commission exonerated all 24 real estate companies, it observed as follows:
"there was no evidence to corroborate that CREDAI has provided any platform, directly or indirectly to its members for indulging in any anti-competitive practice. Further, there is no evidence to find any collusion between the parties/ real estate companies due to the absence of evidence, the same is in no way suggestive of any intrinsic fairness of the impugned clauses."
The commission strongly recommended that not only the investigated parties, but also all players in the real estate sector take appropriate voluntary measures to address the concerns projected in the case. Further, the commission observed as follows:
"CCI hopes and trusts that the Parliament shall take immediate and urgent steps to enact such a law [the Real Estate (Regulation and Development) Bill] which will supplement the existing regulatory architecture in addressing the grievances of the purchasers through a mix of structural and behavioural remedies. Further, the issues raised by the Informant are not only pertinent but need to be addressed by the policy makers and regulators through appropriate legislative tools in tandem with the self-regulatory role played by CREDAI."
By its February 4 2015 order(2) the Competition Commission penalised Kiratpur Sahib Truck Operators Cooperative Transport Society Limited (KSTOCTS) Rs228,000 (calculated at 10% of the average turnover for the last three years) and 5% of the average income of the office bearers of KSTOCTS for the last three years, pursuant to information filed by M/s Shivam Enterprises. In the case at hand, violations of both Section 3 (anti-competitive agreements) and Section 4 (abuse of dominant position) of the Competition Act were found.
It was alleged that individual members of KSTOCTS were not allowed to deal with industries directly, and that orders for service could be placed only with KSTOCTS, which gave it a character of an enterprise providing a relevant service. While imposing its penalty, the commission observed as follows:
"KSTOCTS by use of its trade union tactics grabbed the entire market, thereby, appeared to be a dominant player under explanation (a) to section 4 read with factors mentioned in section 19(4) of the Act. Further, KSTOCTS had been abusing its dominance as it unilaterally fixed freight rates which were non-negotiable. It also barred new players and non-members from entering and conducting business and give competition to KSTOCTS or its members. Further, it strong-arm tactics not only ousted a potential competitor offering services but also compelled the customer to avail of its services at a price which was much higher than what was otherwise available to such customer amounting to unfair prices for transportation services in contravention of the provisions of section 4(2)(a)(ii) of the Act.
Moreover, KSTOCTS limited and controlled the provision of services in the market by ensuring that there are no new entrants in the market who can compete with them, thereby, acting in violation of section 3(3)(b) of the Act , as the members which were competing enterprises, have agreed with each other to limit supply of the service of freight transport by trucks in Kiratpur region by prohibiting any independent transporter from operating in the market."
By its February 16 2015 order(3) the Competition Commission imposed a penalty of Rs142,400 (10% of the average turnover of the last three years) on All India Motor Transport Congress (AIMTC) and passed a cease and desist order on AIMTC for announcing a uniform 15% increase in truck freight across the country due to an increase in diesel gas prices (Rs5 per litre from September 14 2012) in a press conference. While imposing its penalty, the commission observed that AIMTC's conduct, apart from being anti-competitive, also had a cascading affect through various state-level associations affiliated with it, which set a chain reaction in motion and led to similar announcements by state-level truckers' associations.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (email@example.com). The Vaish Associates website can be accessed at www.vaishlaw.com.
(1) Competition Commission order dated February 3 2015, available at www.cci.gov.in
(2) Competition Commission order dated February 4 2015, available at www.cci.gov.in.
(3) Competition Commission order dated February 16 2015, available at www.cci.gov.in.
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