CCI closes case against Real Image Media Technologies, Shree Venkatesh Films, UFO movies and Arti Cinemas Pvt. Ltd. for alleged anti-competitive practices and abuse of dominance |

CCI by its order dated December 06, 2016 has closed the case against Real Image Media Technologies Mumbai, (OP-1) Shree Venkatesh Films Pvt. Ltd., Kolkata (OP-2), UFO moviez India Ltd. , Mumbai (OP-3) and Arti Cinemas Pvt. Ltd., Kolkata (OP-4) for alleged anti-competitive practices and abuse of dominance in the market for sale and distribution of Digital Projection Systems (DPS) in cinema halls in India.

The information was filed by Eskay Video Pvt. Ltd. Kolkata alleging that the opposite parties have been forcing cinema hall owners in Kolkata to have their particular brands of DPS (“Qube” and “UFO”) through exclusive agreements with them for 5 years and have divided the DPS market in West Bengal amongst themselves in this manner. As a result out of 450 cinema halls in West Bengal , 207 cinema halls were using Qube brand of DPS while 228 cinema halls were using UFO brand of DPS and there was no switch over from one brand of DPS to the other or vice versa. The informant was a distributor of a third brand of DPS namely “UMW” brand of DPS in West Bengal which was manufactured by M/s United Media Works Pvt Ltd. and wanted to distribute UMW brand of DPS to cinema halls in West Bengal and could manage to make only 74 cinema halls switch to UMW brand of DPS and that OP-2 , which is the largest producer and distributor of Bengali films in Kolkata and the largest distributor of all other language films including English, Hindi, Bengali and other regional films in West Bengal, by abusing its dominant position, stopped the distribution of its 12 films to the 74 cinema halls which had started using UMW brand of DPS. Further, OP-2 and OP-4 through their agreements with cinema hall owners were not only preventing them from having more than one DPS and are charging higher rates for exhibiting Bengali films but also pressurizing other procedures and distributors not to exhibit films in cinema halls having UMW projection system in West Bengal. The informant alleged that the opposite parties were therefore contravening provisions of both section 3(4) and section 4 of the Act through their in the practice of anti-competitive agreements with cinema hall owners thereby abusing their dominant position by restricting choice for use of any brand of DPS and screening of particular films in cinema halls.

The CCI after giving a preliminary hearing to the parties, however, noticed that the choice to use a certain kind of DPS is a legitimate business decision of a cinema hall owner and the fact that as many as 74 cinema halls in West Bengal have shifted to UMW brand of DPS of the informant showed that there was no entry barrier in the relevant market. The CCI further observes that found that the opposite parties are not in a dominant position in the “market for the distribution/ supply of Digital Projection Systems in cinema halls in India” as there are many established manufacturers of DPS such as Sony, Barco, Imax, Dolby Digital, etc. with their own distributors all over the country who are supplying their equipments to several cinema halls in India. Presence of such players and their distributors indicate that the cinema halls have the option to choose from the other DPS manufacturers. Therefore, opposite parties do not possess the market power to act independently of competitive forces in the relevant market or to affect their competitors or consumers or the relevant market in their favour. Accordingly, the CCI did not find that their existed a prima facie case for investigation and closed the information under section 26(2) of the Act. (Source: CCI Order dated December 06, 2016. For full text see CCI website)

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About the author

M M SHARMA

 Comdt. (Retd.) M. M. Sharma heads the Competition Law & Policy team in VA since 2009 and has over 30 years’ experience as an Advocate of Delhi High Court and holds a Post Graduate Diploma in Economics of Competition Law from Kings College, London. He has worked in the Competition Commission of India (CCI) as Additional Registrar during 2006-2008 and was responsible for drafting the Implementing Regulations under the Competition Act, 2002. He has experience of working as Head-Legal /In-house Counsel for a large Corporate Group in the Steel and Power sector before joining VA in 2009. He has represented clients as an independent arguing Counsel in landmark cases decided by CCI, the Competition Appellate Tribunal (COMPAT) , High Courts and the Supreme Court. As a prolific writer, he contributes articles and is regularly quoted on competition issues in National Newspapers and interviewed by TV Channels. He also teaches as a visiting faculty in various Universities and Institutions and is widely regarded as a subject expert in various Committees of Apex Business Chambers, such as FICCI, CII, ASSOCHAM and PHD CCI.  Mr. Sharma has been mentioned as a “Notable Practitioner” in the “Competition/Antitrust” category of Chambers & Partners (Asia Pacific) Ranking of Leading Lawyers for Business in India for the year 2012 and 2013. VA’s competition law and policy team has also been awarded the Law Firm of the Year Award for “Competition/Antitrust Law” for 2013 by the Indian Business Law Journal. Included as a ‘Recognised Practitioner’ in Individual Lawyers’ranking by Chamber’s Asia Pacific Guide 2020 for Antitrust/Competition Law.