Jaiprakash Associates fined Rs 14 cr for 'undesirable industry practices'

The Competition Commission of India (CCI) has imposed a penalty of nearly Rs 14 crore on Jaiprakash Associates for abusing its dominant market position by imposing "unfair" and "discriminatory" conditions on homebuyers.

"The Opposite Party (Jaiprakash Associates) perpetrated undesirable industry practices causing substantial harm to the competition and to consumers, ignoring its responsibility as a dominant player to set fair standards of industrial practices for other players in the market to emulate," CCI said.

The ruling came on a complaint filed by one Naveen Kataria who had booked a villa at Jaypee Greens in Greater Noida, Uttar Pradesh, in 2011.

In February 2019, the complainant informed the CCI that she did not wish to pursue the instant case, since all the pending disputes with the firm have been settled.

Under the Competition Act, complaints filed under a certain section cannot be withdrawn.

It was alleged that conditions in Provisional Allotment Letter (PAL) were unfair, one-sided and loaded in the favour of the company.

In 2015, the regulator ordered the Director General (DG), its investigation arm, to conduct a detailed probe into the matter.

For the case, the CCI considered 'the market for provision of services for development and sale of independent residential units such as villas, estate homes, town homes and row-houses in integrated townships in Noida and Greater Noida regions' as the relevant one.

The regulator found Jaiprakash Associates to be in dominant position in the relevant market.

Based on the DG's reports and regulator's examination of the issues, CCI found clause pertaining to defaults in the PAL was heavily in favour of the Jaiprakash Associates. Under the pact, there was only a marginal penalty on the firm for any default while the allottees were to pay a huge fine.

Similarly, the fair trade regulator found that there were various clauses which were one-sided and tilted in favour of real estate firm.

"It is clear that the terms and conditions in the PAL are unfair and one sided and are couched in a manner so as to unilaterally favour the OP and be unfavourable to the consumers. Moreover, the allotment letter executed by the OP (Jaiprakash Associates) is vague and does not confer any substantive rights on the buyers." CCI said in an order dated August 9.

By doing so, the real estate firm contravened Section 4 of Competition Act which pertains to abuse of dominant position.

"Imposition of unfair and discriminatory condition by Jaiprakash Associates who was dominant player in the relevant market at the relevant time has serious adverse effects on the market and on their consumers," CCI said.

Accordingly, the CCI imposed a penalty of Rs 13.82 crore, arrived at by calculating 5 per cent of turnover earned by the firm during relevant period (2009-10 to 2011-12) by the regulator.

Regarding the plea made in February 2019 to not pursue the matter, the Commission observed that "the scheme of the Act and the regulations made thereunder do not provide for withdrawal of the information filed under Section 19 of the Act".

Section 19 pertains to inquiry into certain agreements and dominant position of an enterprise.