CCI may penalise DDA

Competition watchdog's probe finds Delhi govt's housing and development agency abusing its prime position; parties to be now heard on findings

After imposing a hefty fine of Rs 1,773 crore on state-owned Coal India Ltd, the Competition Commission of India (CCI) might now soon penalise a government agency, the Delhi Development Authority (DDA).

A recent probe report by the competition watchdog’s director-general (investigation) has found DDA abusing its dominant market position through its housing sale practices, it is learnt.

“We had received a complaint from an individual last year who was allotted a DDA flat in Vasant Kunj (south Delhi). Since there was prima facie evidence against DDA, we ordered a detailed investigation by the DG. The investigation report was recently given to the commission and it has found evidence for abuse of dominance by DDA,” a senior official told Business Standard.

This is the first probe against DDA, a city government agency (though also answerable to the Union urban development ministry), and the biggest land-owning authority in the Delhi region. A DDA spokesperson, when asked, said the authority had no communication about the investigation report and, hence, could not comment on the content. According to official sources, the commission is likely to hold a hearing on the case on Thursday.

In September last year, the competition watchdog had initiated the probe against DDA, on a complaint from an Adla Satya Narayan Rao, alleging violation of various provisions of the Competition Act by the state-owned real estate administrator.

Rao had alleged contravention of Section 4 of the Competition Act by DDA. The section relates to abuse of dominant position, directly or indirectly, by imposition of unfair or discriminatory conditions in purchase or sale of goods or services, as also by predatory pricing.

The complainant alleged he had applied for a DDA Housing Scheme in December 2010 by paying Rs 1.5 lakh. Subsequently, he was allotted a flat in Vasant Kunj and he paid Rs 91.28 lakh to DDA. Though in the Scheme's clause 1, DDA had said all flats were complete and ready for occupation, the reality was different, the complainant had alleged. According to CCI, the complainant alleged that though DDA received full payment from allottees, the flats were nowhere close to completion.

“Rao also alleged that clauses 11, 12 and 14 of the scheme were one-sided and heavily loaded in favour of DDA,\" CCI had said when it initiated the probe.

The Commission will pass a final order after studying the investigation report and also hearing DDA and other involved parties. The amount of penalty is also decided on the basis of the findings and the contentions by the involved parties. DDA was established by a 1957 legislation. It has since been the main agency operating for the development of Delhi. It has also been entrusted with the job of providing housing accommodation to the residents.

In another case related to real estate sector, CCI had imposed a penalty of Rs 630 crore on realty giant DLF in August 2011, on allegations by the flat owners’ association of The Belaire, a housing complex in Gurgaon. The allegations were that the company had delayed the project and built more floors than originally committed. There are other complaints against DLF and a number of other private sector realtor; these are being probed separately.

CCI had also slapped a fine of Rs 1,773 crore on Coal India for allegedly abusing its dominant position in the supply of dry fuel, the first major penalty on a state-owned company. However, the appellate authority has stayed the penalty.