CCI opens investigation against Star India Pvt. Ltd. for alleged abuse of dominance / price discrimination |

CCI directs investigation against Star TV (India) for abuse of dominance in distribution of channel content to MSO in the State of Kerala

The Competition Commission of India (CCI) vide order dated 29.12.2017 has initiated an investigation against Star India Pvt. Ltd (“Star India/ Opposite Party”) for alleged abuse of dominant position by charging discriminatory pricing for distribution of its channels , in violation of Section 4 (2) (a) (ii) of the Competition Act, 2002 (“the Act”) following an information filed by a private company engaged in business of Cable television distribution and Digital Head End , distribution of TV channels i.e , a Multi System Operator ( “MSO” ) in the State of Kerala , particularly in the Thiruvananthapuram district.

The Informant, Thiruvananthapuram Entertainment Network (P) Ltd., has alleged anticompetitive behaviour and abuse of dominant position by the Opposite Party in charging excessive license fee from the Informant as compared to the fee charged from the Informant’s competitors /other MSOs, who are allegedly big players in the State of Kerala such as Kerala Communicators Cable Limited (“KCCL”), Asianet Cable Vision (“ACV”) and DEN Networks Limited (“DEN”) etc. The informant has on evidence provided that when it had entered into an agreement with the Opposite Party on 01.07.2014 for subscription of its 19 channels out of a bouquet of 39 channels offered by the Opposite Party, the license fee agreed was Rs. 1,11,248.12/- for around 22,000 connections (approx. Rs. 5.06/- per connection). In comparison, it is submitted that KCCL which has around 25 lac connections, was apparently paying approx. Rs. 4.40/- in terms of rate per connection during the same period. Thereafter, when on 28.12.2015, the Informant executed two subscription agreements for six months each with the Opposite Party for subscription of 20 channels, the license fee got raised to Rs. 1,15,063/- (approx. Rs. 5.23/- per connection) for the period 01.07.2015 to 31.12.2015 and then Rs. 1,47,510 (approx. Rs. 6.70/- per connection) for the period 01.01.2016 to 30.06.2016. However, in comparison, KCCL was paying approx. Rs. 5/- in terms of rate per connection during the same period. Further, it is submitted on expiration of the agreements dated 28.12.2015, the Opposite Party forced the Informant to execute the next agreement on 15.12.2016 at an even higher rate of Rs. 1,77,000/- per month (approx. Rs. 8 per connection) for the period 01.07.2016 to 31.12.2016 and for Rs. 3,12,500/- per month (approx. Rs. 14.20 per connection) for the period 01.01.2017 to 30.06.2017, for subscription to 20 channels out of a bouquet of 35 channels, by threatening to discontinue the major sports and regional channels, if such rate was not paid. Hence, the Informant, having no other option, was coerced to enter into the agreements at such high rates for further twelve months.

Noticeably, by the time the CCI concluded its prima facie view, the Informant requested to withdraw its information/ complaint since its disputes with the Star India got resolved as Star India agreed to re consider the tariff rates. CCI , however, vide its Order dated 17.8.2017 rejected the request since inquiry before CCI is not always driven by the informant and decided to proceed with the matter under its suo motu powers of inquiry.

Star India’s Stand

in its response , filed pursuant to CCI’s rejection of the request of allowing withdrawal of the complaint , Star India submitted that under the Regulations prescribed by the Telecom regulator, the Telecom Regulatory Authority of India (TRAI) , it was obliged to distribute signals of its TV channels to all Distribution Platform Operators, including the MSOs , on a “must provide” and “non discriminatory” basis on request of a receipt from them . Star India stated , with the help of evidences, that it has not discriminated against the Informant since the Informant can not cite the examples of the other MSOs ,who are not similarly placed and thus justified the different price packages offered to the Informant, who was confined to only a particular district of Kerala .

CCI’s observation:

CCI, rejected the stand taken by Star India and while directing the Director General of the Competition Commission of India (“DG “) to open an investigation against opposite party , observed the following:

The relevant market in the present case is the market for provision of broadcasting services in the State of Kerala.
The Opposite Party appears to be in a position of strength in the relevant market. Further, the price discrimination between different MSOs as brought out in the information needs to be investigated under section 4(2) (a) (ii) of the Act.
If during the course of the investigation, the DG comes across any other conduct of the Opposite Party in addition to that mentioned in the information, which it finds to be in contravention of the provisions of the Act, the DG shall investigate the same as well without restricting and confining itself to the duration mentioned in the information.
The DG is also directed to investigate the role, if any, of any individuals/ officials of the Opposite Party who might have been in-charge of and responsible for the conduct of the business of the Opposite Party, at the time of alleged contravention.
Further, the Commission’s jurisdiction is complementary with that of the TRAI. The powers of the Commission are in addition to and not in derogation of the TRAI’s mandate to regulate the practices of the broadcasters in the concerned sector. The scope of powers and functions of the Commission under the Act and that of TRAI under the TRAI Act, 1997 appear to be distinct in terms of process of investigation and inquiry as also the remedies that may arise from contravention of the provisions of the respective Acts.

My Comment:

This is the third case in which CCI has decided to inquire into the business of distribution arrangement between a TV channel operator and a Multi System Operator (MSO) . The first case related to the complaint filed by an individual Yogesh Ganeshlalji Somani against the creation of a new Aggregator, MediaPro ( joint Venture between Star TV and Zee Turner Ltd.) which was alleged to be likely to cause an abuse of dominant position in the market of distribution of TV channels . The case was represented in CCI by the author on behalf of Zee TV and the case was closed by CCI vide its order dated 21.3.2013. The second case pertained to the complaint filed by a local news channel Kansan News Pvt Ltd. against a MSO ( Fastway Transmission Pvt Ltd ) and two Local Cable Operators (LCOs) for alleged blocking of the contents of the TV channel . The MSO and the LCOs were allegedly controlled by a political party in power in the State of Punjab . CCI imposed penalty on the MSO and the LCOs for abuse of dominant position by denial of market access to the complainant TV channel. The CCI Order dated 03.07.2012 can be read here. In both cases the defense that the entity under investigation were regulated by a separate sector regulator , the Telecom Regulatory Authority of India (TRAI) ,was taken. This defense was accepted by CCI in the first case but rejected in the second case. It remains to to be seen how will CCI finally consider this defense in the present inquiry .

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.