Through an order dated January 20 2011 the Competition Appellate Tribunal refused to stay proceedings initiated by the Competition Commission against real estate company DLF and permitted the commission to proceed with its inquiry.

DLF had approached the tribunal in response to the commission's probe into complaints raised by some of DLF's customers over alleged abuse of its dominant position through the inclusion of "discriminatory and abusive clauses" in the apartment agreements provided to the allottees of two of its high-profile projects in Gurgaon, Haryana.

In March 2011 the Delhi High Court also refused to grant a stay of the commission's investigations into DLF. The petitions before the commission were filed by associations formed by customers of premium residential projects such as Park Place and Belaire. They complained that DLF had failed to deliver the residential projects on time and had included discriminatory and abusive clauses in the apartment agreements provided to the allottees. The petitions also claimed that the company was abusing its dominant position in the market. The director general, who recently reported his findings to the commission, has endorsed the allottees' charges against DLF.(1)

Although the grounds for DLF's challenge of the inquiry after the commission had received the director general's investigation report are unknown, apparently the petition was ill advised, as such an inquiry is a mandatory sequential step under Section 26 of the Competition Act, which prescribes the detailed procedure for a commission inquiry into allegations of anti-competitive agreements and abuse of a dominant position. Moreover, the tribunal, having recently been chastised by the Supreme Court in Steel Authority of India Ltd v Jindal Steel & Power Limited (for further details please see "Supreme Court finds in favour of Competition Commission"), was apparently cautious this time around and has rightly refused to intervene in the commission's statutory process of inquiry.

For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525), fax (+91 11 2332 0484) or email ([email protected]).


(1) Business Standards, January 20 2011.