Rs35m penalty imposed on real estate developer: CAT upholds CCP’s order against housing society

ISLAMABAD: The Competition Appellate Tribunal (CAT) has upheld the Competition Commission of Pakistan (CCP)’s order dated 27th May 2025 against a housing society, directing the real estate developer to deposit a penalty of Rs 35 million for misleading consumers about the location and approval status of its housing project. During the proceedings, the Commission observed that said housing society had engaged in deliberate deceptive marketing by portraying its project, actually located in Mouza Choora, Rawalpindi, as in Islamabad through billboards, social media, and other advertisements, thereby misleading consumers to command higher value. It is further added that the project was being widely promoted as “NOC approved” even before formal approvals were obtained, indicating a calculated strategy to deceive. In its detailed judgment, the Tribunal endorsed the Commission’s findings, holding that the company had clearly misrepresented the project by advertising it as “Kingdom Valley Islamabad” despite its actual location in Rawalpindi. It noted that advertisements had been launched prior to obtaining approvals, reinforcing the element of deception. Rejecting the housing society’s defence that similar practices were prevalent in the sector, the Tribunal observed that “the deception angle becomes insurmountable when violation occurs in broad daylight, ” adding that “two wrongs never make one right. ” While upholding the violation under Section 10(2)(b) of the Act, relating to dissemination of false or misleading information to consumers, the Tribunal maintained the penalty of Rs 35 million, terming the misstatement of the project’s location a “grave default. ” It emphasised that such practices are particularly harmful in the real estate sector, where consumers are frequently misled by exaggerated claims, often resulting in significant financial losses. The Tribunal further directed that failure to deposit the penalty within 20 days would result in restoration of the Commission’s original order in its entirety, exposing the company to higher financial liability. The CCP’s original ruling came with a broader warning from the CCP regarding the systemic risks posed by deceptive marketing in Pakistan’s real estate market. In its original order, the Commission highlighted that real estate remains a critical pillar of the economy, with strong linkages to multiple sectors, yet continues to suffer from weak regulation and the proliferation of misleading schemes. “The importance of responsible and accurate advertising in relation to real estate should not, in any circumstance, be undermined, ” the Commission had noted, pointing out that for most Pakistanis, property investment represents a lifetime financial decision, often financed through savings or bank credit. Misleading claims, therefore, carry far greater consequences than ordinary consumer transactions. The CCP further observed that deceptive marketing practices in the sector not only harm individual buyers but also undermine market integrity and long-term economic sustainability. It noted that Kingdom Valley’s advertising campaign—spanning digital platforms, billboards and print media — was disseminated widely and appeared to be part of a sustained business strategy rather than an isolated lapse. The Commission also flagged the company’s lack of cooperation during the investigation and stressed the need for deterrence, warning that unchecked deceptive practices could distort competition and erode consumer trust The ruling reinforced the CCP’s enforcement stance against deceptive marketing, particularly in the real estate sector, which has come under increasing scrutiny due to persistent consumer complaints and misleading advertising practices. Copyright Business Recorder, 2026

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