Sunday, 8 December 2013

Reliance Big Entertainment Pvt Ltd v. Tamil Nadu Film Exhibitors Association[CCI] CASE STUDY The Competition Act, 2002

Reliance Big Entertainment Pvt Ltd    v.

 Tamil Nadu Film Exhibitors Association[CCI]

Case No. 78 of 2011

Ashok Chawla, Geeta Gouri, Anurag Goel, M. L. Tayal, S.N. Dhingra & S. L.
Bunker[Decided on Competition Act,2002]

Notes: abuse of dominance - Screening of film “Osthie” –
Satellite distribution rights of this film were given to Sun TV - Sun TV owed
certain moneys to TNFA - TNFA directing its members not to screen a film for
which the satellite rights were granted to Sun TV - whether abuse of dominance -
Held, yes.

Brief facts: against Tamil Nadu Film Exhibitors Association (‘the opposite party’/
TNFEA) (now known as Tamil Nadu Theater Owners Association) alleging inter-alia
contravention of the provisions of sections 3 and 4 of the Act.

Reliance Big Entertainment Private Limited (‘the informant’) obtained distribution rights
for film titled Osthi in Tamil language, which was a remake of Hindi film (Dabbang), from
Balaji Real Media Private Limited. The informant granted the said exclusive distribution
rights of the film for the Territory of Tamil Nadu, Kerala and Karnataka to M/s Kural TV
Creations Pvt. Ltd. Further, the informant assigned the Satellite Rights of the said film
to Sun TV Network Ltd.

The Opposite party association directed its member theatre owners not to screen this
film since SUN TV was owing certain sum to the OP. Therefore us, the informant
approached the CCI. The matter was considered by the Commission and the DG was
directed to investigate into the matter. The DG, after receiving the directions from the
Commission, investigated the matter and submitted an investigation report to the
Commission on 30.03.2012.

The DG in the report concluded that TNFEA is the biggest and most powerful 
association of cinema theatre owners in Tamil Nadu, with about 80-90% exhibitors as 
its members, and has complete control over the film exhibition business through its 
members in the State of Tamil Nadu. The opposite party was found to enjoy a position 
in the market of film exhibition in Tamil Nadu that enabled it to take decisions to control 
the market and restrict the services in the market for the producers and distributors. 
The association was further found to impose restrictions on the members from dealing 
with or co-operating with the films or producers to settle the disputes of its members. 
The investigation also revealed that the opposite party has taken decision to impose 
ban on the films which have dealings with M/s Sun TV and directed its members to not 
screen the film unless the payment to its members are made by M/s Sun TV. 
The DG, based on the evidences gathered during the course of investigation, 
concluded that the opposite party had issued direction to its members against 
exhibition of the film Osthie. The video clip of the press conference of General 
Secretary of the association held on 03.12.2011, the documentary evidences furnished 
by the distributors, newspaper reports as well as the minutes of meetings were found 
to confirm that the opposite party indulged in the impugned conduct not only against 
the informant but also against other producers. The investigation revealed that the 
decision to not screen the film Osthie of the informant affected adversely the 
distributors and producers as they were not able to book the theaters on account of the 
ban of TNFEA. The ban was lifted on 06.12.2011 and then only the distributor could 
negotiate and book the film which was slated for release on 08.12.2011. 
Based on the above, it was concluded by the DG that the decisions and conduct of 
TNFEA in respect of the boycott against film Osthie and other films dealt by Sun TV 
were in contravention of the provisions of section 3(3)(b) of the Act. 
Decision: Petition allowed. Penalty imposed. 
Reason: The Commission has perused the information, report of the DG, 
objections of the opposite party to the report of the DG, affidavits and other material 
available on record. The Commission also heard the counsel for the appearing parties. 

On a careful examination and analysis of the material on record, the Commission holds that the impugned conduct of the opposite party association was anti-competitive in as 
much as it limited/ controlled the supply/ provision of services being in contravention of 
the provisions of sections 3(3) (b) read with section 3(1) of the Competition Act. 

The Commission notes that in terms of the provisions contained in section 3(1) of the 
Act, no enterprise or association of enterprises or person or association of persons can 
enter into any agreement in respect of production, supply, distribution, storage, 
acquisition or control of goods or provision of services, which causes or is likely to 
cause an appreciable adverse effect on competition within India. Section 3(2) of the Act 
declares that any agreement entered into in contravention of the provisions contained 
in sub-section (1) shall be void. Further, by virtue of the presumption contained in 
subsection (3), any agreement entered into between enterprises or associations of 
enterprises or persons or associations of persons or between any person and 
enterprise or practice carried on, or decision taken by, any association of enterprises or 
association of persons, including cartels, engaged in identical or similar trade of goods 
or provision of services, which-(a) directly or indirectly determines purchase or sale 
prices; (b) limits or controls production, supply, markets, technical development, 
investment or provision of services; (c) shares the market or source of production or 
provision of services by way of allocation of geographical area of market, or type of 
goods or services, or number of customers in the market or any other similar way; (d) 
directly or indirectly results in bid rigging or collusive bidding, shall be presumed to 
have an appreciable adverse effect on competition. 
Thus, in case of agreements as listed in section 3(3) of the Act, once it is established 
that such an agreement exists, it will be presumed that the agreement has an 
appreciable adverse effect on competition; the onus to rebut this presumption would lie 
upon the opposite party. 
In the present case, the opposite party association could not rebut the said 
presumption. It has not been shown by the opposite party association how the 
impugned conduct resulted into accrual of benefits to consumers or made 
improvements in production or distribution of goods in question. Further, the opposite 
party could not explain as to how the said conduct did not foreclose competition. 

As a result, the Commission is of the view that the impugned conduct of the opposite 
party association was anti-competitive being in contravention of the provisions of 
sections 3(3) (b) read with section 3(1) of the Act.The Commission directs the opposite 
party to cease and desist from indulging in such anti-competitive conduct in future. 
Taking into consideration the above factors, the Commission has bestowed its 
thoughtful consideration on the issue of quantum of penalty. Considering the totality of 
facts and circumstances of the present case including the nature of contravention, the 
Commission decides to impose a penalty on the opposite party at the rate of 10 % of 
its average turnover which has been calculated as per the Income/ Receipts of the 
association as evidenced by Income and Expenditure Accounts for the relevant last 3 
years which were submitted by the association.

(Source: ICSI)


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