CCI slaps Rs one crore fine on Ghaziabad Development Authority

CCI slaps Rs one crore fine on Ghaziabad Development Authority
03/03/2018 , by , in News/Views

The Competition Commission of India (CCI), on February 28, 2018, imposed a penalty of Rs one crore on the Ghaziabad Development Authority (GDA), for abuse of dominant position with regard to sale of flats under a housing scheme for the economically weaker sections (EWS). Passing a detailed order, the watchdog noted that consumers belonging to the EWS have been made to suffer, due to the abusive conduct of the GDA.

The GDA has not delivered possession of the flats to the allottees, even after the lapse of almost 10 years, the CCI said, in a 30-page order, passed after taking into account the detailed investigation report in the matter. It was alleged that GDA had arbitrarily increased the price of a flat from Rs two lakhs mentioned in the allotment letter to Rs seven lakhs. The complainant had got the flat through a lottery draw in 2009 under a housing scheme for the EWS.

For the case, the CCI considered ‘the market for provision of services for development and sale of low-cost residential flats under affordable housing schemes for the economically weaker sections in the district of Ghaziabad‘, as the relevant market one. According to the order, GDA’s conduct in raising the price of EWS flats from the initial price, without any enabling provision, on ‘the pretext of miscalculation of cost of the project’, can only be explained as a case of abuse of dominant position by it in the relevant market. “The Commission observes that the consumers who belong to EWS have been made to suffer because of such abusive conduct of GDA,” it added.

The fine of Rs 1,00,60,794 imposed on the GDA, translates to five per cent of average turnover/ receipts generated from the provision of services for development and sale of low-cost residential flats under affordable housing schemes for the EWS. The figures for three financial years – 2014-15, 2015-16 and 2016-17 – were taken into consideration. The CCI noted that the abusive behaviour of GDA is also seen, in respect of imposing arbitrary and unilateral conditions in the allotment letter, if there is a delay in payment of the instalments by the allottees.

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