CASES

A. DLF Case: In this Casev, CCI found the conditions of the

Apartment’s Buyers Agreement to be in violation of Section 4(2) (a) (i),
i.e. to be unfair and discriminatory and a penalty of Rs. 630 crore was
imposed by CCI on DLF (7% of the average turnover for the last
preceding three years). The moot point in this case was the competition
concern of a dominant player abusing its dominant position by imposing
blatantly unfair conditions in the “agreement” with its customers and bind
them in such one-sided contractual obligationvi. CCI held the conduct of
DLF in this regard as ‘unfair’ and even exploitative. While finding this,
CCI examined various clauses of the Apartment Buyers Agreement of
DLF and found them to be unfair and discriminatory like unilateral
changes in agreement and suppression of terms by DLF without any rights
to the allottees, DLF’s unilateral right to change the super area without
concurrence of allottees, allottees have no exit options, punitive penalty
for default by allottees, insignificant penalty for DLF’s default, etc.vii

It is pertinent to mention here that in this case the CCI not only imposed a
penalty on DLF but also highlighted the need for a real estate regulation
and accordingly directed the Secretary to inform all concerned:
“The examination of this case has brought forth several areas of
concern pertaining to the housing sector in India. The Commission
feels that although there is a plethora of laws, there is no proper
regulation of the real estate sector, particularly the housing sector.
In order to promote overall consumer welfare, to ensure freeand
fair competition in real estate residential market and to set
standards of conduct of enterprises engaged in similar nature of
trade, the Commission therefore makes a strong recommendation to
the Central Government and all State Governments to come out
with real estate regulations at the earliest for ensuring overall
consumer welfare and to discourage unfair trade practices that seem
prevalent in the sector.”

After-Market Abuse argument of Member (R): Following the principle laid

down in the Eastman Kodak Case in US (US 451-1992), it was held that
there are two markets in the real estate case i.e. the first market where the
consumer enters into an agreement with the builder and the second market
is the aftermarket after it has enter into an agreement with the builder as a
locked-in consumerviii.

While DLF was directed to modify the unfair and discriminatory clauses
in this case by CCI, at the direction of Hon’ble COMPAT, CCI vide its
supplementary order dated 03.01.2013 provided for the modified clauses ix.
In DLF Case, the COMPAT has upheld the findings of the Commissionx
as regards abuse of dominant position by DLF and so also the penalty
amount. However on a technical point COMPAT has observed that the
CCI could not have examined the clauses of the Apartment Buyers
Agreement as Section 4 was not in force on the date of the agreement. The
decision of COMPAT is now in appeal before Hon’ble Supreme Court.

Pragati Maidan Case:

Another case xi of unfair and discriminatory condition imposed by a
dominant player is relating to the Pragati Maidan in Delhi. This case was
against the Indian Trade Promotion Organization (ITPO) for abusing its
dominant position in the relevant market for “provision of venue for
organizing international and national exhibitions, trade fairs (events) in
Delhi”. It was held in this case that Pragati Maidan is the only established
venue for holding international and national trade fairs/exhibitions
(events) in Delhi and ITPO as venue provider for holding events in Delhi
has absolute control and dominance. It was further found that ITPO has
abused its dominant position by imposing unfair and discriminatory
condition on the third-party event organisers for example the time gap
restriction between two “third partyevents” was 15 days before and after
the event whereas in case of ITPO’s own organised events/exhibitions, the
time gap restriction was 90 days before and 45 days after the event (which
was amended to 90 days before and after the event in 2011). This was
held to be unfair and discriminatory by CCI xii. A penalty of 2% of the
average turnover of preceding three years was imposed on ITPO which
amounted to Rs. 6.75 crores.

B. Coal India Case: CCI passed a common orderxiii against Coal India
Limited and its subsidiary finding it to abuse its dominant position by
imposing unfair/discriminatory conditions and indulging in
unfair/discriminatory conduct in the matter of supply of non- coking coal
to power producers by way of unequal Fuel Supply Agreements (FSAs)
imposed upon the purchasers of coal who do not have any option but to
approach Coal India for supply of coal. While finding the abuse under
section 4(2)(a)(i) of the Act, CCI found the following specific clauses to
be unfair and discriminatoryxiv:
(i) Clauses relating to the sampling and testing procedure.
(ii) Clauses relating to charging the transportation and other
expenses from the buyers on supply of ungraded coal and
the clauses relating to DDQ.
(iii) Clauses relating to capping on compensation for supply of
stones for new power producers.
(iv) Clauses relating to review and termination provisions of the
agreement.
(v) Discrimination between existing and new power producers
with respect to review of grade.
(vi) Clauses relating to force majeure for new power producers.

A penalty of Rs. 177305 crores, i.e. 3% of the average turnover of last

preceding three years was imposed on Coal India. The matter is under
appeal before COMPAT. As regards promoting competition in this sector
and requirement of a regulator, CCI observed:
“However, there is an imperative need to carry forward this reform
 momentum further by restructuring the sector by introducing more
number of players so that it can reduce the dominance of any one
player and can facilitate competition. Bringing the coal sector
under the independent regulatory oversight would only help if there
are enough players in the market.”

C. Adani Gas Case: Similar to Coal India case (supra), CCI found
that Adani has imposed unfair conditions on the buyers by way of Gas
Supply Agreement (GSA), for example “likely termination of contract by
the opposite party on account of failure to off-take 50% or more of the
cumulative DCQ by the buyer during a period of 45 consecutive days as
against the longer period available to the opposite party from GAIL.” CCI
imposed a penalty of 4% of the average turnover, i.e. Rs. 2567 lakhs on
Adani in this casexv along with the orders to cease and desist and
modification of the unfair and discriminatory clauses of the GSA.

The aforesaid cases provide adequate example as to the approach of

dealing with the unfair and discriminatory conditions imposed by a
dominant enterprise in India. It appears from the interpretation of the
Commission’s order that the dominant enterprise or group in India has a
special responsibility to discharge and cannot behave as they like which
leads to detriment of the market.