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Jan 02, 2013, 08.25 AM IST | Source: PTI

CCI expects model pact in DLF case to serve as benchmark

Fair trade regulator CCI is working on a model framework for commercial agreements between real estate developer and the property buyer, which it expects to serve as a benchmark for the industry.

Fair trade regulator CCI is working on a model framework for commercial agreements between real estate developer and the property buyer, which it expects to serve as a benchmark for the industry. The framework is being prepared by the Competition Commission of India (CCI) in connection with a high-profile market dominance case against realty giant DLF Group, which has challenged a Rs 630 crore penalty imposed on it by CCI.

Upon hearing DLF's appeal against the CCI order, the Competition Appellate Tribunal (COMPAT) asked the fair trade regulator to present a modified buyer-seller agreement between DLF and the flat buyers of its two housing projects in Gurgaon in the national capital region. "Whether a real estate company is dominant or not, DLF was found to be dominant because it was big, most of them follow the same format pattern that flows from big players in the market," CCI Chairman Ashok Chawla told PTI in an interview.

Also Read: DLF office rental income to reach Rs 2,500 cr by FY15

Asked whether he expects the modified pact being prepared by CCI to serve as a benchmark for the entire real estate industry, Chawla said that it should certainly "serve as a general model of framework". "I think once that happens, that (the modified pact) meets judicial test, that I believe should take care of the most of the commercial aspects between the buyer and the seller," Chawla said.

COMPAT has asked the fair trade regulator to decide on what constitutes a good, balanced and fair agreement between the buyer and the seller. CCI is expected to shortly finalise the key parameters related to the buyer-seller pact in the context of DLF case. "I won't be surprised if that (the modified pact) is accepted and stands judicial scrutiny, it would give a sort of key to the mind of the Commission which most real estate companies might follow," he added.

Chawla said there would always be issues related to local laws and regulations in the real estate sector, but CCI's jurisdiction was limited to the agreement between the buyer and the seller and whether any anti-competitive practices were being followed in that regard. "How much can be built and how much cannot be built, that are not our concern," he added.

"If the model agreement is fair and balanced... by and large the issues get resolved," the CCI chief emphasised. CCI had slapped a penalty of Rs 630 crore in August last year on DLF after finding the realty major guilty of abusing its dominant market position. The orders were passed following inquiries into complaints filed by the flat buyer associations' of two separate DLF projects in Gurgaon, DLF Park Palace and The Belaire, alleging delays in the project and increase in the number of floors than planned earlier, among other things.

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