Background of the Case:

A Lahore-based real estate company, Vision Developers, had obtained the approval of the Lahore Development Authority (LDA) for a housing society, “River Edge Housing Scheme.” The company subsequently applied for NOC from the LDA for a new housing scheme, “Park View Villas”, which was denied by LDA for being located close to a riverbank, which could be prone to flooding. Despite this, Vision Developers advertised the new unapproved scheme under the deceptive name of “Park View Villas at River Edge Housing Society,” giving the impression that the new scheme was an extension of the earlier-approved “River Edge Housing Scheme.”

Order:

The Commission held that the Respondent was engaged in the sale, purchase and development of residential and commercial properties and hence was an ‘undertaking’ as defined in Section 2(1) of the Competition Act; therefore, all the Respondent’s commercial and economic activities were subject to the provisions of the Act and the Commission was empowered to take action with respect to the violation thereof.

The Commission also held that its enquiry officers appointed and authorized to enquire into a particular matter have all the relevant powers to investigate the alleged contraventions of inter alia, Section 10 of the Competition Act, and such powers extent to all spheres of economic and commercial activities of an undertaking.

The Commission also observed, in response to the Respondent’s assertion that the Complainant did not have the standing to file a complaint, that the Complainant in the matter was engaged in the provision of services with respect to the procuring and disposal of real estate in the name of M/s Matto Trading and Construction (as demonstrated from the submitted tax return) and therefore constituted an undertaking, which had the standing to file a complaint under the Competition Act.

The Commission noted that the Respondent had engaged in deceptive marketing by giving the impression that Park View Villas is a registered housing scheme. The Commission held that the unsubstantiated claims of the Respondent had the potential of creating an unfair positive material perception on part of the actual or potential consumers in favour of the Respondent, which in turn, is capable of harming the image, good will, sales and other business interests of its competitors.

The Commission imposed penalty of PKR 10 million on Vision Developers (Pvt.) Limited for violation of Section 10 of the Competition Act, 2010.

The Commission observed that for the masses it almost takes a lifetime of savings or obtaining credit or loans to make such an investment for securing a more stable future. This transactional decision, according to the Commission , is a much more complex one as against buying a household or shelved product from a supermarket. In view of these observations, the Commission highlighted the higher burden placed on businesses which operate in the real estate market.

The Commission also stressed on the importance of enhanced regulation of the real estate sector and responsible and accurate advertising by the developers to protect consumers from financial and material losses.

CURRENT STATUS:

Green Field filed appeal before CAT challenging the order. Matter is subjudice before CAT.