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CCI could start an investigation over the norms of real-estate industry
One of the leading media houses in the country, Economic Times quoted an official stating that the CCI was considering a suo-motu (acting without a complaint) against other real estate companies.
The newspaper reported that under the provisions of the Competition Act, the CCI can start an investigation without receiving any complaint, especially if something comes out as industry practice that harms consumer interest.
Specialization is that 'if' the regulator initiates the action and find other companies embroiled in such practices, then it could fine all of them at a similar scale -- 7% of average turnover for the last three years.
The CCI, was critical of 15 specific terms and conditions in the contract between the buyers and the developers of The Belaire, a residential project in Gurgaon. The regulator opined that these terms and condition were stacked in favor of the developer.
To defend itself, DLF said that such was the industry practices. And it was adopting the same. The company even showed brought buyer agreements from other builders to the CCI, for examination.
The newspaper reported that the anti-monopoly watchdog has picked on this. There is every possibility that it could initiate an inquiry against the builders. If necessary then even an action against them is possible.
This case against DLF along with the threat of action against the industry is surprising. The reactions varied from justifying the contract and hence asserting agreements to question on the jurisdiction.
Lalit Kumar Jain, national president of the Confederation of Real Estate Developers' Associations of India (Credai), was quoted by the Economic Times as 'In the backdrop of consumer protection acts and forums being available, the role of CCI and validity of its intervention in these transactions need to be examined.'
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