COMPAT by its order dated November 9, 2016 has ordered investigation against 6 producers of Hollywood films for the allegedly forcing the a technology, called D-Cinema technology, for providing cinema screening under the auspices of Digital Cinema Initiatives, LLC, a joint venture between the 6 movie producers.
In an information filed by K Sera Sera Digital Cinema Pvt. Ltd. (Informant), it was alleged that the exhibitors who want to use non D-Cinema technology for screening of Hollywood films are not given the Hollywood films for release thereby getting them excluded from the line of business. The Informant itself propagates the technology of E-cinema for cinema screening. Informant alleged that by this conduct the respondents are excluding any other method of exhibition of Hollywood films and, therefore, have resorted to anti-competitive conduct.
Respondents have defended their act by stating that their technology is superior in nature, it provides piracy proof exhibition and the adoption of technology is entirely voluntary. They further state that in order to protect their intellectual property they release their films only to those who adopt this particular technology.
The CCI had initially dismissed the allegations. However, the COMPAT by its earlier order dated 08 December 2015 had remanded the matter back to the CCI for reconsideration stressing on the need to analyse as to at what point forcing standards can lead to pushing out competition. The COMPAT was of the opinion that as long as there is pluralism in the standards, all coexist and market demands determine their survival. By the COMPAT’s earlier order, it was opined that such forcing of particular standards was by itself a good enough reason for the CCI to have directed an investigation into the matter.
However, upon reconsideration, the CCI again dismissed the matter holding that the technology propagated by Respondents was superior to the Informant’s D-Cinema technology.
During the second appeal, the COMPAT noted that the CCI had done nothing by “way of value addition” in the CCI’s second order. The CCI itself recognised that there would be foreclosure of competition if technology choices are severely constrained. The COMPAT also noted that in CCI’s order the issue of cartel has been addressed to some extent, there is no prima facie examination of the question of dominance as alleged in the information. COMPAT disagreed with the respondents’ claim that their technology is voluntary, when they themselves create potential entry barriers by releasing their films only to those who opt for digital technology.
COMPAT concluded that it would have saved time and efforts of all those involved in this matter if the CCI had ordered an investigation into the matter. Accordingly, the impugned order was set aside and the DG was directed by COMPAT to conduct investigation into the allegations contained in the Information filed by the Appellant. Source: COMPAT Order dated November 09, 2016. For full text see COMPAT website)