Fair-trade watchdog close to verdict on Jaypee case

CCI is learnt to be close to a decision on whether Manoj Gaur-led Jaypee Group has abused its 'dominant position' in Noida and Greater Noida real estate market

The Competition Commission of India (CCI) is learnt to be close to a decision on whether the Manoj Gaur-led Jaypee Group has abused its "dominant position" in the Noida and Greater Noida real estate market.

Four years ago, CCI had imposed a penalty of Rs 630 crore on leading developer DLF for abusing its dominant position in Gurgaon. The imposition of the penalty was upheld by the Supreme Court.

CCI is investigating a matter related to "information" given by a buyer (Naveen Kataria) on a villa at Jaypee Greens in Greater Noida. While this deals with an allotment made in March 2011, the competition watchdog is also looking at allegations of "unfair, onerous and one-sided" contracts by the developer in other cases in the same region, according to a preliminary observation.

The Jaypee group didn't reply to Business Standard's email query on the matter, sent on Friday evening.

The preliminary report in the matter states the complainant has alleged contravention of section 4 of the Competition Act. The section says no enterprise or group shall abuse its dominant position. It will be considered abuse of a dominant position if an enterprise or a group directly or indirectly imposes unfair or discriminatory conditions in the purchase or sale of goods or service, or if the price is unfair, discriminatory or predatory, it adds.

The informant had booked a villa of 655 sq yards, with super area of 5,700 sq ft and basement of 500 sq ft, for about Rs 4 crore. In the provisional allotment letter, "the developer failed to mention provisions such as complimentary golf membership, total area of the plot, and additional basement area of 500 sq ft, other than the agreed super area of 5,700 sq ft, etc," says a report on the CCI website. It is alleged Jaypee told the buyer any additional construction beyond the agreed area would be charged at Rs 7,105 per sq ft. After repeated reminders, the developer allegedly informed the buyer that additional construction would be charged at Rs 5,000 per sq ft.

The buyer has also alleged that the clauses of the provisional allotment letter are unfair and in favour of the developer. The buyer received the possession letter in September 2013, after a delay of eight months, according to the informant.

An analyst said the geography and product were critical to determining whether the builder was abusing its dominant position.

The preliminary report had said the geography in this case appeared to be the region of Noida and Greater Noida. "This is because Noida and Greater Noida exhibit distinct characteristics from a buyer's point of view and conditions of competition in the Noida and Greater Noida areas appear to be distinct from areas such as Delhi, Gurgaon and Ghaziabad in the National Capital Region."

Jaypee Group has operations in construction, cement, hydro power generation, hospitality and infrastructure development, including construction of expressways, and real estate. The group has residential projects spread across 452 acres in Greater Noida. As part of the Yamuna Expressway Project, it secured 6,175 acres along the Yamuna Expressway for various projects.
HIGHLIGHTS

• The Competition Commission of India (CCI) is learnt to be close to a decision on whether the Manoj Gaur-led Jaypee Group has abused its "dominant position" in the Noida and Greater Noida real estate market.
• CCI is investigating a matter related to "information" given by a buyer on a villa at Jaypee Greens in Greater Noida
• While this deals with an allotment made in March 2011, the competition watchdog is also looking at allegations of "unfair, onerous and one-sided" contracts by the developer in other cases in the same region, according to a preliminary observation