2013 (5) TMI 168 - Commission - Companies Law

Anti-Competitive Agreement - The informant had produced a feature film by the title Vishwaroopam . The informant as an innovative and pioneering step and to take advantage of exhibition of film via (DTH) platform, wanted to premiere the movie through DTH service providers. It is stated in the information that out of total number of theatres (1134) in Tamil Nadu, 698 theatres were members of the opposite party association. Resolution was passed by the opposite party not to lend co-operation for screening of any film that is released even before it comes to the theatre, through DTH or any other technology. Held that - The impugned resolution was an anti-competitive agreement amongst the theatre owners in Tamil Nadu since the resolution limited and controlled the market of exhibition of films and use of technical development in exhibition of feature films and in contravention of the provisions of section 3(1) read with section 3(3)(b) of the Act. The Commission, therefore, directs the DG under section 26(1) of the Act to cause an investigation to be made into the matter and submit the report to the Commission within 60 days.

Summary

Issues:
Violation of competition law by an association of theatre owners in Tamil Nadu by passing a resolution not to cooperate in screening films released on Direct to Home Satellite Television Services (DTH) platform before theatrical release.

Detailed Analysis:

Issue 1: Alleged Anti-competitive Agreement
The informant, a partnership firm, produced a film for global release in three languages. It planned to premiere the movie on DTH platforms before theatrical release. However, the association of theatre owners in Tamil Nadu passed a resolution not to cooperate in screening films released on DTH or any other technology before theatrical release. The informant contended that this resolution contravened the provisions of section 3(1) read with section 3(3)(b) of the Competition Act, 2002.

Issue 2: Competition Law and Consumer Welfare
The Competition Commission of India emphasized the objective of competition law to promote competition and consumer welfare. It noted that technological innovations and novel uses of technology enhance competition and consumer welfare. The Commission recognized the informant's attempt to experiment with an innovative way to premiere its movie through DTH for wider consumer reach. The decision of the association of theatre owners to restrict screening of movies released on DTH or any other technology appeared to limit the market of film exhibition, potentially affecting competition and consumer benefit from newer technologies.

Issue 3: Prima Facie Case of Anti-Competitive Behavior
The Commission found that the resolution of the association of theatre owners seemed to be an agreement among its members to control the market of film exhibition and innovative technical developments in the industry. The resolution was deemed to be anti-competitive as it restricted producers from providing consumers with economic opportunities to watch premieres at home. The Commission concluded that the resolution prima facie contravened Section 3 of the Act and warranted further investigation by the Director General (DG).

Conclusion:
In light of the above analysis, the Competition Commission of India directed the DG to conduct a thorough investigation into the matter and submit a report within 60 days. The Commission clarified that its order did not signify a final opinion on the case's merits, and the DG should carry out the investigation impartially without being influenced by the Commission's observations. The Secretary was instructed to provide relevant materials to the DG and concerned parties in accordance with the Act and regulations.