Competition Appellate Tribunal (COMPAT) directs re-consideration by CCI against movie producers/distributors for alleged cartelisation in setting unfair standards in cinema exhibition |

COMPAT, by its order dated December 08, 2015 reversed the order of CCI dated April 22, 2015 which closed a case without initiating investigation against the 7 movie producers/distributors engaged in the production/distribution of Hollywood movies.

The case was filed by K. Sera Sera Digital Cinema Pvt. Ltd alleging that the 7 opposite parties(OPs) compelled digital providers to use only DCI technology if the Indian digital service providers want to exhibit popular Hollywood films like “Fast and Furious 7” and “Avengers-Age of Ultron”.

It was alleged that OPs are forcing equipments which are different from the ones used by K Sera Sera. The technology used by K Sera Sera and similar other service providers is generically called ‘E-cinema’. It was alleged that the OPs are doing so with a view to force competition out so that their films can be exclusively projected using DCI technology and equipments made therefor. Thus their conduct amounts to cartelization, anticompetitive arrangement and suppression of competition in India. This also deprives 80% of the cinema halls in India of Hollywood films.

The OPs primarily argued that DCI compliant technology is essentially an open architecture technology prescribing high standards with a view to provide superior quality of performance for the viewer and improved efficiency of exhibition for the digital service provider. It provides open access and a much better viewing experience and though the equipment is expensive, the superior quality and more efficient projection compensates for the slightly higher capital cost.

COMPAT, while considering arguments, was of the opinion that there is no doubt that introducing efficiency in distribution of services through process of standardization is a desirable objective of the Act. However, it is a matter for consideration as to at what point forcing standards can lead to pushing out competition. High standards are not anti-competitive per se, but they should not be used to create anti-competitive conditions in the market or what is termed ‘tyranny of standards’ in trade literature. COMPAT considered that there are many instances where private standards have muted competition in many ways.

COMPAT ordered that the matter should be remitted to the CCI for reconsideration whether for directing investigation under Section 26(1) of the Act made out or not.

(Source: Order dated December 08, 2015. For full text see COMPAT website-www.compat.nic.in)

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.