CCI issues notice to 20 builders including BPTP, Omaxe on one sided Agreement and BuiltUp Area

[dheerajjain]

CCI issues notice to 20 popular builders including BPTP, Omaxe on one sided Agreement and BuiltUp Area. CCI investigation reveals:

1. Builders do not give information to apartment owners about actual built up area and arbitrarily increase or decrease areas.
2. Builders charge very hefty interest from apartment owners on any delay but themselves provide very less interest to buyers on project delays
3. Builders do not give information to apartment owners about under which rules and regulations projects are being built. Titles and rights they keep with themselves.

Please read full article on:

http://economictimes.indiatimes.com/mar ... 648004.cms

MUMBAI: The Competition Commission of India (CCI) has asked 20 leading builders, including Tata Housing, K Raheja, Unitech, Ansal Properties and Purvankara, to respond to findings by its investigation arm that they engaged in unfair trade practices such as one-sided contracts with inadequate disclosure.

In a report prepared after the investigation, the anti-monopoly watchdog has found that these builders did not disclose crucial information about the built-up area and often reserved the right to increase or decrease apartment sizes.

The builders also charged high interest from apartment owners for payments after due dates but paid significantly lower rates if they delayed construction of the project, according to the report, which ET has reviewed.

Other practices uncovered by CCI include non-disclosure of applicable laws, rules and regulations with respect to the projects being developed besides restricting the rights of apartment allottees.

Builders also retained the right to allot, sell or transfer any interest in the common areas and facilities at their discretion. CCI has sought responses from Unitech, Oberoi Realty, BPTP Ltd, Gaursons India, K Raheja Corp, Amrapali Group, Supertech Ltd, Tata Housing Development Company, Ansal Properties & Infrastructure, Purvankara Projects, Prestige Estates Projects and Ambuja Neotia Group.

CCI to hear matter in September

The competition watchdog has also sought responses from Avalon Group, Aparna Construction and Estate, Amit Enterprises Housing, Omaxe, Parsvnath Developers, PS Groups Salarpuria Group and Purohit Construction. The Confederation of Real Estate Developers' Associations of India (Credai) lobby group has also been asked to comment.

CCI will hear the matter between September 22 and 26. The commission began investigations based on a complaint by an individual, Jyoti Swarup Arora, against Gurgaon-based builder Tulip Infratech, the director of town and country planning, Haryana, and the Haryana Urban Development Authority.

The complainant alleged an understanding among all real estate players in the market to the detriment of consumers, saying that the code of conduct adopted by Credai indicated collusion among its members. The commission directed the investigation officer to probe the matter after observing that the conduct of Tulip and other members of Credai indicated prima facie violation of the provisions of the Companies Act.

The CCI director-general then shortlisted builders and developers of Credai with a pan-India presence in order to get a representative sample for the purpose of investigation. Credai acknowledged the CCI query but declined to comment saying that national president C Shekar Reddy was travelling. Some of the companies named in the report denied the accusations.

"The Competition Commission of India has taken up the matter against us as a Credai member. We have not committed any irregularities," a spokesperson of Aparna Constructions & Estates said in an email response. "We have handed over the matter to our advocates in New Delhi and they are looking into the matter and they advised us not to discuss the matter in public as the same is the sub judice."

The fair trade regulator is investigating the matter under Section 3 (3) (a) and (b) of the Competition Act for alleged cartelisation. A cartel typically implies arrangements among more than two firms aimed at increasing prices through tactics such as cuts in production. Cartelisation leads to high prices, poor quality and reduced choice.
CCI asks 20 realtors to respond to report that shows companies engaged in unfair trade practices
As per the Competition Act, the maximum penalty for cartelisation is three times a company's profit or 10% of its turnover, whichever is higher. "We have entered appearance before the commission and filed our preliminary reply denying the allegation of contravention of Section 3 of the Competition Act, 2002," said Purvankara Projects group CEO Jackbastian K Nazareth.

"The commission has granted two-weeks time to inspect the case file and a further four-weeks time to furnish its reply to the investigation report." Pune-based Amit Enterprises also denied entering into one-sided agreements with customers.

"Maintaining transparency with the home buyers has always been a tradition with this firm," a spokesperson said.

"There is complete clarity in all our transactions; all calculations are made as per industry standards and relevant information is shared with the client in advance. There is no question of one-sided contracts and not sharing important information with our clients."

BPTP said that CCI in its various orders has held that the firm is not in a position to influence the market. "The present notice is general in nature and has been addressed to all major real estate developers in Delhi NCR and since the matter is sub judice in nature, we would not like to comment more on the same."Email queries to all other developers named in CCI report did not elicit any response as of press time.

In 2011, CCI had fined DLF Rs 630 crore for violating fair trade practices following a complaint by the Belaire Owners' Association in Gurgaon in May 2010. DLF has challenged the order in the Supreme Court.

[tvkrishnam]

In Faridabad all the builders have the same contract with same clauses and all of them follow the same practces as the accused. Similar to the current complaint in Faridabad also the Hariyana government is invilved.

If all suppliers of a particular commdity in a certain area follow the same practices to cheat consumers then they can be charged under rules of CCI for cartelization. Since all builders in Greater Faridabad follow the same practices with a view to cheat buyers they can be accused of cartelization and so CCI can take them to task.

".... The commission began investigations based on a complaint by an individual, Jyoti Swarup Arora, against Gurgaon-based builder Tulip Infratech, the director of town and country planning, Haryana, and the Haryana Urban Development Authority...."

I think any resident welfare association as well as GFRWA can file a complaint with CCI including all the buiders of Greater Faridabad (Piyush included).

Essence of the complaint should be this is not a matter involving some large developers but involves all the builders and developers in Gurgaon and Faridabad.