Competition Commission of India
M/S Shri Ashtavinayak Cine Vision ... vs Pvr Picture Limited, New Delhi & Ors. ... on 8 May, 2013
BEFORE THE COMPETITION COMMISSION OF INDIA
NEW DELHI
Case No. 71 of 2011
Date: 10.01.2013
IN THE MATTER OF
M/s Shri Ashtavinayak Cine Vision Limited
Through
Shri Vikram Mehta, Advocate Informant
AND
1. PVR Picture Limited, New Delhi through Shri Ashvani Matta, Senior Advocate
2. Northern India Motion Pictures Association, Jalandhar City through Ms Mala Goel,
Advocate
3. Motion Pictures Association, Delhi
4. Central Circuit Association, Bhusawal
5. TelenganaTelegu Films Distributors, Secunderabad
6. Telengana Film Chamber of Commerce, Secunderabad
7. Film Distribution Association, Kerala
8. Karnataka Film Chambers of Commerce, Bangalore
9. Eastern India Motion Picture Association, Guwahati
10. Eastern India Motion Picture Association, Kolkata
11. Andhra Pradesh Film Chamber of Commerce, Hyderabad
12. Nepal Motion Picture Association, Nepal
13. Orissa Film Distributors Syndicate, Cuttak
14. The Chennai KanchipuramThiruvallur District Film Distributors Association, Chennai
15. Indian Motion Picture Distributor's Association, Mumbai
16. Bihar & Jharkhand Motion Pictures Association, Patna
17. Indian Film Association, Mumbai
18. Eros International Limited, Mumbai
Opposite Parties
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ORDER UNDER SECTION 27 OF THE COMPETITION ACT, 2002
The present Information was filed on 04.11.2011 by M/s Shri Ashtavinayak Cine Vision
Limited, Mumbai (hereinafter referred to as "the Informant") under section 19(1) (a) of the
Competition Act, 2002 (hereinafter referred to as "the Act") against M/s PVR Pictures Ltd.
(hereinafter referred to as "the Opposite Party No.1"), Northern India Motion Pictures
Association (hereinafter referred to as "the Opposite Party No.2"), Motion Pictures Association
(hereinafter referred to as "the Opposite party No.3"), Central Circuit Association (hereinafter
referred to as "the Opposite Party No.4), Telangana Telugu Films Distributors (hereinafter
referred to as "the Opposite Party No.5"), Telangana Film Chamber of Commerce (hereinafter
referred to as "the Opposite Party No.6"), Film distributors Association (hereinafter referred to as
"the Opposite Party No.7"), Karnataka Film Chambers of Commerce (hereinafter referred to as
"the Opposite Party No.8"), Eastern India Motion Picture Association (hereinafter referred to as
the "Opposite Party No.9"), Eastern India Motion Pictures Association (hereinafter referred to as
"the Opposite Party No.10"), Andhra Pradesh Film Chamber of Commerce (Opposite Party
referred to as "the Opposite Party No.11"), Nepal Motion Picture Association (hereinafter
referred to as "the Opposite Party No. 12"), Orissa Film distributors Syndicate (hereinafter
referred to as "the Opposite Party No.13"), The Chennai Kanchipuram Thiruvallur (hereinafter
referred to as "the Opposite Party No.14"), Indian Motion Picture Distributor's
Association(hereinafter referred to as "the Opposite Party No.15"), Bihar & Jharkhand Motion
Pictures Association (hereinafter referred to as "the Opposite Party No.16"), Indian Film
Exporters Association (hereinafter referred to as "the Opposite Party No.17") and Eros
International Limited (hereinafter referred to as "the Opposite Party No.18 or Eros") alleging
inter alia contravention of the provisions of sections 3 and 4 of the Act by the opposite parties.
2. Facts of the case, in brief, are as under:
2.1 As per the informant, it is a company incorporated under the provisions of the
Companies Act, 1956 and inter alia carrying on the business as a Production House
engaged in the production and distribution of cinematographic films. The Opposite
Party No. 1 is a company carrying on business of distribution and exhibition of
feature films and the opposite party Nos. 2 to 17 are associations of distributors who
are trade bodies registered under the Societies Registration Act or under the Trade
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Union Act of their respective States. The Opposite Party No. 18 is a company
carrying on business of distribution of feature films.
2.2 The informant has stated that as per the practice prevalent in the film-industry a
distributor is normally required to register a film through the distributors' Association
for the territory in which the distributor is carrying on business and after registration
is done, distributor is allowed to book theaters for release of the feature films.
Ordinarily, unless registration is done through the distributors' Associations,
theatrical booking is not allowed.
2.3 As per the informant, in India, an exhibitor cannot be approached directly unless the
trade body of the local association of distributors and exhibitors in that territory
registers the film for exhibition in the territory in which that association/ trade body
has control. Every association formulates the byelaws governing its functioning and
regulates the film distribution in such territory for maintaining the distribution market.
2.4 The informant has alleged that these Associations make it compulsory for every film
distributor to become their member and/ or register its film with the Associations
before the exhibition of such films. A distributor who refuses to become a member of
the Association and/ or refuses to register his film with the Association is not allowed
to distribute and exhibit its film in the territory which is regulated by such association.
It is alleged that the Associations enforce such compulsion on distributors by
threatening their members consisting of cinema distributors and exhibitors of serious
consequences for exhibiting films of a distributor who is not a member of any of the
Associations or whose film is not registered with the respective Association. The
cinema exhibitors are unwilling to take the risk of exhibiting the film of a distributor
who is not a member of the Association or whose film is not registered with the
Association.
2.5 The informant has also alleged that by compelling the distributors to become their
members, the Associations strengthen their dominant position and impose undue
and unfair restrictions against the various stakeholders in the film industry. The
informant has also alleged that the Associations are acting like a cartel of distributor
members for the benefit of their members at the cost of imposing undue restrictions
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against the others who are not their members such as the directors and producers
of the films.
2.6 The informant has further alleged that even when the distributors have only acquired
the theatrical distribution rights of the film, these Associations make those
distributors sign their standard form of registration which has clauses putting an
undertaking on the distributors not to exploit the other rights of such film for certain
period e.g. (i) satellite rights will not be exploited for certain period, (ii) home video
rights will not be exploited for certain period, etc. The informant has stated that the
distributors of the films have no choice but to sign these forms.
2.7 As per the informant, it had produced a film "Khatta Meetha" and appointed the
Opposite Party No. 1 as one of the distributors. Due to some dispute over the
realization of the dues, the account between the Opposite Party No. 1 and the
informant was not settled.
2.8 The informant has submitted that the Opposite Party No. 1 issued letters to the
informant demanding payment on account of alleged under-recoveries as allegedly
due to it. The Opposite Party No. 1 had claimed that it was entitled to recovery of a
sum of Rs. 61, 41, 894/- (Rupees Sixty One Lacs Forty One Thousand Eight
Hundred Ninety four only) and interest towards un-recouped and unrecovered
advance out of the advance amount of Rs. 2, 15 00, 000/- (Rupees Two Crores
Fifteen Lacs only) paid by it to the informant. As per the informant, it had disputed
the claim of the Opposite Party No. 1 in its reply to the demand letters issued by the
Opposite Party No. 1.
2.9 The informant has alleged that the Opposite Party No. 1 purported to file a false
complaint against it with the Opposite Party No. 2. On 12.02.2012, the Opposite
Party No. 2 issued a letter to the informant enclosing therewith a copy of the
complaint filed by the Opposite Party No. 1 .As per the informant, it had duly replied
to the said letter issued by the Opposite Party No. 2 and contended that it has no
jurisdiction in the matter and also denied the false claims of the Opposite Party No.
1.
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2.10 As per the informant, it produced another feature film 'Rockstar' and appointed the
Opposite Party No. 18 as distributor of the said film. The picture was slated for
release on 11.11.2011. As per the informant, when the Opposite Party No. 18 was
trying to negotiate for the booking of theaters for the said film, it was informed to the
Opposite Party No. 18 by the Opposite Party No. 2 that the said film could not be
registered as the same film had already been registered in its record in the name of
one M/s Puri Sons and secondly, it was stated that the association had received a
complaint against the informant. The Opposite Party No. 2 had also issued a circular
dated 24.10.2011 to its members regarding the claim of M/s Puri Sons.
2.11 The informant has contended that M/s Puri Sons had informed to the Opposite Party
No. 2 vide letter dated 28.10.2011 that they had already relinquished their rights in
respect of the said film for the East Punjab territory.
2.12 The informant has further alleged that in spite of the fact that M/s Puri Sons had
confirmed that they had relinquished all their rights in respect of the film Rockstar,
the Opposite Party No. 2 refused to register its film on the pretext of alleged pending
claims of the Opposite Party No. 1. The informant apprehended that since the
Opposite Party No. 1 distributes feature films all over India, It might have already
filed similar complaints with other Associations viz. the Opposite Party Nos. 3 to 17
who would also not permit to register the said feature film in their territories.
2.13 The informant has submitted that the opposite parties by virtue of their position of
strength are able to compel the distributors to become their members and be
obliged to abide by unfair and discriminatory restrictions imposed by them against
non-members in order to fulfill the demands of their members. As per the informant,
the act of non-registering its film by the opposite parties is prohibited by section 4(2)
(a) of the Act read with section 19 of the Act. Further, the consequence of impugned
action of the Opposite Party Nos. 2 to 17 is denial of market access to the informant
under section 4(2)(c) of the Act by denying registration of the film in the respective
territories of the Opposite Party Nos. 2 to 17.
2.14 The informant has also alleged that the Opposite Party Nos. 2 to 17, in addition to
the contravention of provision of section 4 of the Act, had also contravened section
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3(3) with section 3(1) and 3(2) by entering into an anti-competitive agreement with
members in the form of circulars and directives with a view to limit or control the
production, supply, market or provision of services. The Opposite Party Nos. 2 to 17
had also contravened the provisions of section 3 (4) of the Act by refusing to deal in
respect of distribution of goods and by promoting exclusive supply/ distribution
agreement.
3. The Commission considered the information in its meeting held on 18.11.2011 and
after forming a view that there exists a prima facie case under section 26 (1) of the
Act directed the DG to conduct an investigation into the matter and submit a report.
4. The Commission vide order dated 18.11.2011 dismissed an application filed by the
informant under section 33 of the Act seeking interim relief on the ground that the
application had become infructuous since the film was actually released on the
appointed date in most parts of the country.
5. The DG after receiving the order of the Commission investigated the matter and
submitted an investigation report dated 25.05.2012 to the Commission. The findings
in the DG report, in brief, are as under:
5.1 For the purpose of investigation, the DG adopted the methodology of issuing probe
letters to the opposite parties for furnishing the relevant information. Letter was also
issued to the informant asking it to file certain details supporting the allegation made
by him. The DG has also referred to the order dated 16.02.2012 of the Commission
in case No. 25, No. 41, No. 45, No. 47, No. 48, No. 50, No. 58 and No. 69 of 2010
and the Commission's order dated 16.02.2012 in Case Nos. 52 and 56 of 2010.
5.2 As per DG report, a number of complaints against the film trade associations have
been received in the Commission alleging the violations of the provisions of Act.
Prior to this case, reports in 16 such cases had been submitted on the anti-
competitive conduct of these Associations. The Commission has also passed the
orders in most of those cases. The facts relating to the role of these associations,
their functions, modus operandi, territories and rules and regulations had been
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mentioned in detail in all the earlier reports as well as in the orders of the
Commission.
5.3 The DG report has mentioned about the territories and other details of film
associations functioning in India, the details regarding their incorporation and the
area of operation is as under:-
Name of the Date of Incorporation/ Act
SI. No. Circuit/ Territories
Association Under which formed
1. Northern India Motion 50 years back/ Registered Punjab, Haryana, J&K,
Pictures Association, u/s 25 of Companies Act Himachal Pradesh,
Jalandhar Chandigarh (UT)
2 Bihar & Jharkhand 1987/ The Companies Act, Entire State of Bihar &
Motion Pictures 1956 Jharkhand
Association, Patna
3 Central Circuit Cine 1952/ The Companies Act, M.P., Rajasthan,
Association, Indore/ 1913 Chhattisgarh and part of
Bhusawal/ Jaipur Maharashtra (Vidarbha &
Khandesh region)
4 Motion Pictures More than 50 years/ Delhi, Uttar Pradesh,
Association, Delhi Registered u/s 25 of Uttarakhand
Companies Act
5 Film Distributors' 1987/ Regd. Societies State of Kerala
Association (FDA), Registration Act, 1955
Ernakulam
6 The Karnataka 1944/ Karnataka Societies Mysore territory and most
Chamber of Registration Act of the parts of Karnataka
Commerce (KFCC),
Bengaluru
7 (a) Telangana 1999/ Andhra Pradesh Nizam area of Andhra
Telugu Film Public Societies Pradesh, Maharashtra and
Distributors Registration Act, 1350 Karnataka
Association,
Secunderabad
(b) Andhra
Pradesh Film
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Chamber of
Commerce
8 Eastern India Motion 1945/ Registered u/s 25 of West Bengal, Odisha
Pictures Association, Companies Act 1956 States
Kolkata
9 Utkal Cine Chamber 1993/ Certificate of State of Odisha
of Commerce registration Act 1860
10 Indian Motion Picture Gujarat, Goa &
distributors Maharashtra (except some
Association, Mumbai part under Vidarbha
region) and parts of
Karnataka
11 (a) South India Film Registered under the Tamilnadu, Kerala
Chamber of societies Act.
Commerce
(b) Film Distributors
Association, Kerala
5.4 DG has reported that the aforesaid associations mainly consist of the persons
engaged in the business of film distribution and exhibition in their territories.
However, some of the associations accept the producers also as their member.
These associations have their Memorandum and Articles of Association and rules/
byelaws to conduct their business as well as to regulate all the activities associated
with film distribution business. Their sources of income are mainly generated by way
of contributions from members, annual fees, registration fees, arbitration charges,
and penalties/ fines recovered from producers and members.
5.5 The DG has also reported that the informant in this case has made 18 parties as
opposite parties. However, the details filed by the informant do not specifically
reveal any anti-competitive conduct against the opposite parties except the Opposite
Party Nos. 1 and 2. The Opposite Party Nos. 3 to 17 have been made opposite
parties on the apprehension that they might interfere with the release of the film
'Rockstar' in their respective territories. However, the Opposite Party Nos. 3 to 17 in
their replies denied imposing any restriction on the release of 'Rockstar'.
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5.6 As per the DG report, during the release of film 'Rockstar' two different issues came
before the Opposite Party No. 2 - one relating to the distribution rights between M/s
Puri Sons and M/s Eros and the other relating to the un-recouped amount of M/s
PVR against the informant.
5.7 After examining all the facts of the case, the DG has reported in his report that the
distribution rights of the film 'Rockstar' for East Punjab territory were registered in
favour of M/s Puri Sons, Jalandhar in September, 2011 i.e. much before the release
date of the film. However, on 24.10.2011 M/s Puri Sons complained to the Opposite
Party No. 2 that the Opposite Party No. 18 was approaching the exhibitor members
for booking of the film 'Rockstar' in East Punjab territory. On this complaint, the
Opposite Party No. 2 issued a letter to the Opposite party No. 18 to stop such
practice. The Opposite Party No. 2 has stated before the DG that in order to
safeguard the rights and title of its distributor member and to avoid any dispute
between members, it had issued letter dated 24.10.2011 to the Opposite Party No.
18 requesting them to stop approaching exhibitor members for booking the film
'Rockstar', as the film was registered in the name of M/s Puri Sons. Thereafter, the
issue of distribution rights of 'Rockstar' got settled between M/s Puri Sons and the
informant, and M/s Puri Sons relinquished the distribution rights of the said picture
for the assigned territory and intimated the Opposite Party No. 2 vide their letter
dated 28.10.2011.
5.8 On the basis of above facts, the DG has reported that the action of the Opposite
Party No. 2 regarding distribution rights of 'Rockstar' on the complaint of its member
appears to be justified. When the informant had already granted distribution rights to
M/s Puri Sons and the same was already registered with the Opposite Party No. 2,
the claim of rights by another distributor in the same territory without any
communication or notice created confusion in the territory of the Opposite Party No.
2. On the basis of the facts as enumerated above, the DG was of the view that the
action of the Opposite Party No. 2 in issuing letters to the members and the
concerned persons in this regard did not attract any anti-competitive element. As
such no restriction on the distribution either directly or indirectly was imposed by the
Opposite Party No. 2 by way of its letter dated 24.10.11 regarding the distribution
rights of film 'Rockstar'.
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5.9 The DG has further examined the circular of the same date i.e 24.10.2011 issued by
the Opposite Party No. 2 to its members informing that it had received a complaint
from the Opposite Party No. 1 against informant with regard to picture 'Khatta
Meetha' and the same was being processed. As per the DG report, the purpose of
issuing this circular was to caution its member against the informant and its
forthcoming picture 'Rockstar'. The issue of distribution rights of 'Rockstar' got
settled between M/s Puri Sons and the informant and M/s Puri Sons issued NOC to
the Opposite Party No. 2 on 28.10.2011 in this regard. When the distribution rights
got settled and the Opposite Party No. 18 acquired the distribution rights and
applied for registration for distribution in the territory of East Punjab on 02.11.2011,
the Opposite Party No. 2 issued another letter on 04.11.2011 to the Opposite Party
No. 18 and kept the registration pending on the plea that the informant had an
outstanding liability of Rs. 64, 03, 679/- to the Opposite Party No. 1.
5.10 The DG has further reported that the Opposite Party No. 2 has defended its
conduct on the pretext that one of its objectives as enunciated in clause 3(g) (v) of
its Memorandum of Association is to settle the business disputes of its members. In
due pursuit of the said objective, it is the duty of the Association to help the
members to resolves the disputes/ differences between its members who submit
themselves to its jurisdiction of the arbitration.
5.11 As per the DG report, the investigation has revealed that the dispute relating to
outstanding amount was raised before the Opposite Party No. 2 way back in the
month of January, 2011 by the Opposite Party No. 1 vide its letter dated
27.01.2011.the Opposite Party No. 2 on receipt of said letter from the Opposite
Party No. 1 issued a letter to the informant on 12.02.2011 seeking comments on the
claim of the Opposite Party No. 1. The informant in response to above, replied to the
Opposite Party No. 2 vide letter dated 08.03.2011 mentioning that the complaint
filed by the Opposite Party No.1. was false and also that as per the agreement of
film "Khatta Meetha", the Opposite Party No. 2 had no jurisdiction for assuming the
role of arbitration on the monetary claim of the Opposite Party No.1.
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5.12 The DG has also reported that the Opposite Party No. 2 started its action in this
matter only when the film 'Rockstar' was nearing its release. Had there been a
sincere approach by way of arbitration as claimed by the Opposite Party No.2, some
action or initiative should have been taken between March 2011 and October 2011.
As per DG report, the documents submitted by the Opposite Party No. 2 as well as
by the Opposite Party No. 1 did not reflect any fresh correspondence for recovery of
its outstanding money in the month of October 2011.
5.13 On the basis of the above facts and circumstances, the DG has reported that the
Opposite Party No. 2 as a matter of practice as already found on many earlier
occasions in the cases investigated by his office started the tactic of threatening the
non-registration of film and interfering in the release of film to settle the dispute
relating to outstanding amount of its member. As per the DG report, vide its
confidential circular circulated amongst its member dated 24.10.2011, the Opposite
Party No. 2 mentioned that a "complaint has been received from M/s PVR Pictures
Ltd. against Shree Ashtavinayak Cine Vision Ltd., with regard to picture 'Khatta
Meetha'. The complaint is being processed." On the basis of the said letter, the DG
came to the conclusion that it is clear that the Opposite Party No. 2 started
processing the complaint dated 27.01.2011 of PVR only on 24.10.2011 by way of
intimating all the members about the complaint.
5.14 As per the DG report, on 04.11.2011, the Opposite Party No. 2 issued letter to Eros
directing them to resolve the matter relating to the claim of the Opposite Party No. 1
and deposit the amount immediately on receipt of the letter to enable them to
process the pending application of registration. This letter was an indirect threat to
the film distributor and producer to follow the diktat of the Opposite Party No. 2 or to
face the consequences. Thus, the Producer settled its dispute by making payment
to the Opposite Party No. 1 before the release of film and only after issue of the
NOC letter from the Opposite Party No. 1 on 10.11.2011 the film was released
smoothly.
5.15 The DG has further reported that the Opposite Party No. 1, as a member of the
Opposite Party No. 2, was fully involved in the decision making against the
informant. The facts gathered indicate that the Opposite Party No. 1 persuaded the
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Association to resort to anti-competitive conduct against the informant. In the letter
written by the Opposite Party No. 1 on 27.01.2011 to the Opposite Party No.2, it had
mentioned that Please ensure that the picture Run Bhola Run is not registered or
allowed to be released till the settlement of our claim in 'Full and Final'. As per the
DG report, although the Opposite Party No. 1 in its individual capacity had no role in
controlling the film distribution market in the territory of the Opposite Party No. 2 but,
its role in decision making process of the anti-competitive conduct cannot be denied.
By suggesting the Association to not allow the release of the film of the informant, by
invoking its decision to not register or release a film is a violation of the provisions of
Act. The investigation also revealed that only after settlement of claim of the
Opposite Party No. 1 by the informant and issue of no objection letter on
10.11.2011, the film could be released on 11.11.2011. Thus the circumstances
clearly indicate that the informant was pressured by refusing to register the film in
the territory of the Opposite Party No.2. As per the DG report, the Opposite Party
No. 1 in its reply has claimed that the Commission directed the Informant to pay un-
recouped advances along with the interest to the Opposite Party No.1. The order u/s
33 of the Act on this case was passed by the Commission on 18.11.2011, whereas
the payment was made by the informant to the Opposite Party No. 1 on 10.11.2011
i.e. one date before the release of film. Further, in the order of the Commission, no
such direction to the informant regarding making payment to the Opposite Party No.
1 could be noticed. In the order, while deciding the case on the request for interim
relief, the Commission opined that there would not be ay irreparable loss if the
informant deposits the amount with the Opposite Party No. 2 (not to the Opposite
Party No.1) till the adjudication of the claim. Thus, apparently wrong facts have been
quoted by the Opposite Party No. 1 in its reply to justify its conduct. As per DG
report, the facts and circumstances of the case clearly show that the payment made
by the informant to the Opposite Party No. 1 to secure the smooth release of the film
in the territory of the Opposite Party No.2.
5.16 The DG has further reported that all the opposite parties in their replies have denied
that any restriction on release of the film "Rockstar" was imposed by them and the
film was released in their territories on the date of its original release i.e. 11.11.2011
without any interference from their side. On the basis of the replies filed by the
opposite parties, documents available on record and the other relevant facts and
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evidence, DG has also reported that no anti-competitive conduct against the other
parties (the Opposite Party Nos. 3 to 18) against the informant in respect of film
'Rockstar' has been found.
5.17 As per the DG report, the conduct and bylaws of the Opposite Party No. 2 have
been found to be restrictive in nature, the Opposite Party Nos. 1 and 2 have violated
the provisions of section 3(3) (b) of the Act by imposing restriction on the release of
film 'Rockstar'. The Memorandum and Articles of Association and rules of the
opposite party associations relating to compulsory registration of films, prohibiting
dealing with non-members and imposing hold-back period of release of films, etc.
are restrictive in nature and in violation of the provisions of section 3(3)(b) of the Act.
As per DG report, the opposite party associations are deciding not to have any
dealing with a person who does not agree with the directions of the Associations.
Thus, based on the practices adopted and rules and regulations framed by the
opposite party associations, DG has reported that the opposite party associations
are involved in anti-competitive conducts in the film distribution business in their
respective territories.
5.18 As per the DG report, after conducting the inquiries, examining the clauses of
Articles of Association, replies received from the opposite parties, information
received from the informant and its analysis with reference to the reply received
from the opposite parties, it is found that opposite parties are found to have indulged
in anti-competitive conduct of giving directions to its members and putting
restrictions on the release of films, and controlling the film distribution business. The
conduct of the Opposite Party Nos. 1 and 2 was found to be in violation of the
provisions of section 3(3)(b) of the Act on the basis of their decision to impose
restriction on the informant.
5.19 The DG has concluded in his report that the Opposite Party No.1 is not a trade
association of film distributors, and therefore it has no role and capacity to
individually restrict the market of film distribution in the territory of the Opposite Party
No. 2. However, the investigation has clearly revealed that the M/s PVR Pictures
Ltd. being a member of the Opposite Party No.2, was involved in the decision
making process of the anti-competitive conduct of the Opposite Party No. 2 against
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the informant. The Opposite Party No. 1 has been found to make written request to
the Opposite Party No. 2 to not allow the release of one of films of the informant to
recover its outstanding money. The conduct of M/s PVR Pictures is therefore found
to be in violation of the provisions of section 3(3) (b) of the Act.
5.20 The DG has also reported that the Opposite Party No. 2 invoked the decision to
refuse registration and release of the film 'Rockstar' unless the payment of its
member was settled. It had issued circulars and letters among its members and the
distributor of film 'Rockstar' to this effect. Further, the following rules/ byelaws of the
association already mentioned in the earlier reports in Case Nos. 25/2010, 52/2010
and 56/2010 have also been found to be in violation of the provisions of the Act:
i. Restriction on members to deal with non-members - The provisions mentioned in
rule 16(a) of Regulations imposes restriction on its members on dealing with
non-members.
ii. As per the provisions of rule 22 members are prohibited to release/ screen/ book
the picture unless it is registered.
iii. As per the registration form it is mandatory to undertake that the film cannot be
released on satellite/ television before expiry of one year.
iv. Restrictions on selling video/ CD rights before two weeks from the theatrical
release of the film in the country.
v. Restrictions on selling and/ or disposing of TV rights of the film for release in
India and not before six month from the premier theatrical release of the Film in
India.
5.21 On the role of Motion Picture Association (MPA), Delhi, Central Circuit Cine
Association (CCCA), Karnataka Film Chamber of Commerce (KFCC), Eastern India
Motion Pictures Association (EIMPA), Guwahati and Kolkata and Andhra Pradesh
Film Chamber of Commerce (APFCC), the DG has reported that although no anti-
competitive conduct against the informant or against the release of the film
'Rockstar' has been found in the instant case but, their rules and byelaws relating to
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the membership, registration of film withholding of release on TV, CD, DVD etc. are
found to be anti-competitive which were already highlighted in the investigation
reports of the earlier cases.
5.22 Further, on the role of Telangana Telugu Film Distributors Association (TTFDA) (the
Opposite Party No.5),Telangana Film Chamber of Commerce (TFCC) (the Opposite
Party No.6) Film Distributors Association (FDA), Kerala (the Opposite Party No. 7),
India Motion Pictures Distributors Association (IMPDA), Mumbai (the Opposite Party
No.15) and Bihar and Jharkhand Motion Pictures Association(BJMPA) (the Opposite
Party No.16), Orissa Film Distributors Syndicate (the Opposite Party No.13),
Chennai Kanchipuram Thiruvallur District Film Distributors Association (the Opposite
Party No.14),Indian Film Exporters Association (the Opposite Party No.17) and M/s
Eros International Media Ltd. (the Opposite Party No. 18), the DG has reported that
no anti-competitive conduct or practice has been found against these parties in this
case.
5.23 On the role of M/s Nepal Motion Pictures Association, Kathmandu (the Opposite
Party No. 12), the DG has reported that no details against the Opposite Party No. 12
have been submitted by the informant. The informant was requested to submit
details of role of the Opposite Party No.12 in film distribution as well as its conduct
against the release of Hindi movies. However, nothing has been furnished by the
informant. Further, the letters issued to Nepal Motion Picture Association at its
address "Bishal Nagar, Kathmandu, Nepal", as provided by the informant, has
remained un-complied with.
6. The Commission considered the matter in its meeting held on 05.06.2012 and decided
to send copies of the investigation report to the informant, the Opposite Party No. 1,
the Opposite Party No. 2 and the office- bearers of the Opposite Party No. 2 for filing
their reply/ objection on the DG report. The Commission also directed the said
opposite parties to file their Profit & Loss Account and Balance Sheet for the last three
years along with the reply to the DG report. The Commission further directed the
office- bearers of the Opposite Party No. 2 to file their Profit & Loss Accounts and
Balance Sheets for the last three years of the enterprises which their represented.
15
7. In response to the notice sent by the Commission, the Opposite Party No. 1 filed its
comments/ objections dated 06.08.2012 to the DG report. The relevant contentions of
the Opposite Party No. 1, in brief, are as under:
7.1 As per the reply of the Opposite Party No. 1, the dispute between the informant and
it was a commercial dispute hence; the Commission has no jurisdiction to entertain
the present matter. The Opposite Party has relied upon the order passed by the
Commission in the cases of M/s Mittal Auto Sales and Service v. Global
Automobiles, Ravi Suri v. M/s Today Homes & Infrastructure Pvt. Ltd. and Eastman
Cast & Forge Ltd. v. Exact Developers & Promoters Pvt. Ltd.
7.2 As per the contention of the opposite party, the movie 'Rockstar' was released on
the slated date of release as noted by the Commission in its order under section 33
dated 18.11.2011 and hence, no cause of action lies. The opposite party has further
submitted that the DG's investigation has failed to reveal the fact that the movie
'Rockstar' was registered on 14.11.2011 with Opposite Party No. 2 three days after
its release and non-registration of a film could not have had any effect on the
release of the movie or otherwise.
7.3 The opposite party has submitted that the allegation of the informant centered on
the repayment of Rs. 61, 41,894.00 (Rupees Sixty One Lakhs Forty One Thousand
Eight Hundred and Ninety Four Only) plus interest towards the un-recouped and
unrecovered advance amount of Rs 2, 15, 00,000.00 (Two crores fifteen Lakhs)
which had been alleged to have been paid earlier by the Opposite Party No. 1 to the
Informant prior to the releases and exhibition of film Khatta Meetha. As per the
opposite party, despite its repeated request, the informant failed to repay the
amount. As per the answering opposite party, being helpless in recovering the
outstanding from the informant, it filed it grievance before the Opposite Party No. 2.
7.4 The answering opposite party has contended that the DG in the report did not take
into consideration the complete facts of the dispute but only relied upon the last
paragraph of letter dated 27.01.2011 which was issued by it to the Opposite Party
No. 2 raising its grievance of outstanding towards the informant. As per the Opposite
Party No. 2, the Opposite Party No. 2 is an independent adjudicatory body which
16
settles the dispute in the industry. Clause 3 (g) (v) of the Memorandum of
Association of the Opposite Party No. 2, authorizes it to arbitrate and settle disputes
of its members. The clause also mentions that in case of any dispute between
members of the Association and between all persons engaged in production,
distribution and exhibition of the Indian Film Industry, such person could file their
grievance with it for resolution of its issues.
7.5 The answering opposite party has also claimed that informant has been a habitual
defaulter and opposite party has been facing similar problems with the informant.
The opposite party informed that there have been various media reports about film
Financer Raju Shah moving court against the informant over dues worth Rs 36
crores and dishonored cheques worth Rs 8 crores. Eros too had filed a winding up
petition before the High Court of Bombay against the informant over dues amounting
to Rs 8 crores.
7.6 As per the opposite party, there has been a continuous correspondence by it to the
Informant for the recovery of outstanding dues and it had also sent a letter dated
30.08.2011 to the informant requesting in for the repayment of the recouped and
refundable advance amount for the film Khatta Meetha. However, the DG in its
report has stated that the documents provided by it and the Opposite Party No. 2 did
not reflect any fresh correspondence for recovery of its outstanding money in the
month of October 2011. This proved that the DG did not go into the background of
this case and conducted his investigation superficially.
7.7 The answering opposite party has further contended that the DG did not consider
the past disputes between it and the informant relating to films 'Blue' and 'Dabangg'.
In the absence thereof, the report did not accurately capture the series of events
leading to the filing of the present Information which would have amply
demonstrated that the same is misplaced and mala- fide.
7.8 The opposite party has also submitted that the film namely Run Bhola Run, which
was mentioned in letter dated 27.01.2011 issued by it to be the Opposite Party No.
2, has not been released as yet hence, there is no question whether there was any
problem in the registration or release on the said film.
17
7.9 As per the contentions of the answering opposite party, despite various probe
notices issued by the DG to the informant and a proposal for initiating penalty
proceedings under Section 43 of the Act against the informant, the informant did not
appear before the DG or the Commission. The Opposite Party No.1 provided the
requisite information and evidence that proved that the filing of the Information by
the informant was with a mala- fide intention to avoid paying the amounts due to it.
7.10 On the issue of film 'Rockstar' produced by the informant and distributed by Eros,
the opposite party has submitted that the DG's report stated that the Opposite Party
No. 2 issued a circular to all its members dated 24.10.2011 mentioning that a
complaint had been received from it against the informant regarding film 'Khatta
Meetha'. The DG concluded that the Opposite Party No. 2 started processing the
complaint dated 27.01.2011 only on 24. 10. 2011 by way of intimating all the
members about the complaint. The opposite party has alleged that DG has
overlooked the following considerations while arriving at its conclusions:-
a) The Opposite Party No. 2's primary objective as an association is to safeguard
the interests of its members;
b) The rationale of the circular dated 24.10.2011 was that the Opposite Party No. 2
did not want its other members to face problems with the informant similar to the
issues the opposite party no. 1 was facing.
c) The reason for the circular being issued in October despite the opposite party 's
request in January was that this was the first film that the informant was
producing after 'Khatta Meetha' and prior to October, the need for cautioning the
members did not arise.
7.11 The answering opposite party has admitted that film Rockstar was earlier given for
distribution to M/s Puri Sons but thereafter, it was given for distribution to Eros. As
per the answering opposite party, on receipt of application from Eros dated
02.11.2011 for registration, the Opposite Party No. 2 intimated Eros vide letter dated
04.11.2011, that there was an outstanding claim of the Opposite Party No. 1 against
18
the informant and the application for registration was pending. The DG has found
the aforesaid letter of the Opposite Party No. 2 to be an indirect threat to follow its
directions. The Opposite Party No. 1 has also submitted that there was no direction
or threat by the Opposite Party No. 2 to clear the dues and the conclusion by DG
being an indirect threat is long drawn. The Opposite Party has informed that the
members register their films to protect their prints from piracy/ intellectual property
theft, disputes in relation to distribution/ exhibitions etc. Registration of a movie does
not impact the release of movie.
7.12 The Opposite Party No. 1 has further submitted that Eros has not alleged anything
against the Opposite Party No. 2 nor has made any complaint regarding
noncooperation from various exhibitors for the release of the film "Rockstar". As per
the Opposite Party No. 1, the circular of registration of the film 'Rockstar' was issued
by the Opposite Party No. 2 only on 14.11.2011 i.e. three days after the date of its
release. Therefore, no restriction was imposed on the members of the Opposite
Party No. 2 for not to screen an un-registered film. The film was released on all its
cinemas on the same day as the worldwide release. The answering opposite party
has relied on the advertisement issued by Eros in Punjab Kesari in Jalandhar dated
06.11.2011 wherein names of various cinemas (single screens and multiplex chains
including PVR) where the film was screened were mentioned.
7.13 The answering opposite party has also submitted that the Opposite Party No. 2 has
never imposed any restriction on its members for not screening an unregistered film.
Some of the unregistered films with NIMPA which were exhibited are:-
a) Agent Vinod-Eros
b) Char Din Ki Chandani-Reliance
c) Dangerous Ishq-Reliance
d) House Full-Eros
e) Tor Mitra di(Punjabi)
7.14 As per the answering opposite party, the only allegation against it in the DG report
relates to its letter dated 27.01.2011 issued to the Opposite Party No. 2, and the
Commission in its order dated 18.11.2011 under Section 33 of the Act has already
highlighted that the above cause of action arose early in 2011 and the informant
19
approached Commission at the eleventh hour; therefore, there was no irreparable
loss being caused to the informant.. In the absence of a finding that there was
limitation of production, supply, markets, technical development, investment or
provision of services qua the informant itself; the possibility of there being an AAEC
does not arise.
7.15 The answering opposite party has also contended that the DG has also failed to
establish in the course of its investigation that it had exercised or even had the
ability to influence the decisions of the Opposite Party No. 2. The reliance of the DG
on several proceedings before Commission was entirely misplaced since none of
the facts in issue in those proceedings were similar to the allegations leveled against
OP in the instant proceedings and hence, the findings arrived at in those
proceedings would not apply to the instant matter. The differences from the instant
proceedings are:-
A. Registration with the Opposite Party No. 2 is not necessary as several movies
which have been exhibited without being registered.
B. The DG has wrongly and without any basis interpreted the meaning of the
circular of the Opposite Party No. 2 to its members to be coercive in nature. It
was only to bring to the knowledge of its members that a dispute was pending.
C. Also, there has been no evidence lead by the informant to show that it suffered
any monetary losses nor was there any allegation of discrimination against its
movie on the basis of regional bias because of non-registration.
7.16 As per the answering opposite party, DG has not considered the following facts
before arriving at the conclusion that it had violated Section 3(3) of the Act:-
a) That the facts of the present case are different with that in Case No. 25 of 2010
and Nos. 52/56 of 2010 suggesting that the findings of the Commission in
these cases cannot apply to the instant case;
b) That owing to a lack of examination of factors laid out in Section 19(3), there is
no finding in respect of AAEC being caused or likely to be caused by any joint
decision (if any) of members of the association;
c) That the membership to the association is voluntary and is not a pre-requisite for
exhibition of a movie;
20
d) That the ultimate purpose of the existence of an association like the Opposite
Party No. 2 is to serve as a mediator in resolution of disputes of its members;
e) That in the presence of a platform such as the Opposite Party No.2, the
producers are aware of the distinct distributors, thereby making the
coordination process for the producers and distributors facile in order to get
their movie registered;
7.17 The answering opposite party has relied upon the order of the Commission in case
of the Consumer Online Foundation v. Tata Sky Ltd. & Others ( Case No. 02/2009. )
wherein it was discussed that, "The definition of "cartel" under section 2 (b) of the
Act has the phrase "by agreement amongst themselves" as its fulcrum. For any
"practice" to be considered as concerted action, the facts must be counterpoised on
that fulcrum of "by agreement amongst themselves". Such "agreement" should not
be adduced, assumed or arrived at through eliminative or wishful reasoning but
must be concluded through amassment of undisputable evidences. The establishing
of joint mens rea of non-competition is imperative. This is absent in the instant case.
7.18 The answering opposite party has further relied upon the case of Sugar Mills (Case
No. 01/2010) wherein it was held that since the investigation did not establish
foreclosure of any competition as outlined in Section 19(3)(c) or that any competitor
was driven away from the market as mentioned in Section 19(3)(b), no adverse
appreciable effect could be inferred.
8. The Opposite Party No. 2 on 23.07.2012 has also filed its reply/ objections to the DG
report. The relevant contentions of the Opposite Party No. 2, in brief, are as under:
8.1 The answering opposite party has submitted that pattern of film trade and business
is very different from an ordinary sale of goods or services, the answering opposite
party has highlighted pattern of film trade and business in India.
8.2 The answering opposite party has also submitted that it is a non-profiteering body
for promoting art, culture, charity, commerce etc. and solely uses their funds to
promote their objects which are duly approved by Company Law Board. It has been
functioning as a Domestic Tribunal for around 55 years. The territories of the
21
Opposite Party No. 2 are Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh
and Chandigarh (UT). The membership to the Association is fully and completely
voluntary and no coercion or force is exercised by the Opposite Party No.2, on any
one to take its membership. Further not only distributors and exhibitors but
Producers in their capacity as distributors are also the members of the Opposite
Party No.2.
8.3 The answering opposite party has further submitted that under Article 3 (v) of its
Memorandum of Association, it is mandated for settlement of disputes. It Acts like a
domestic Arbitral Forum to settle the disputes amongst members and between all
persons engaged in the production, distributors and exhibition of the Indian Film
Industry and to arbitrate etc. with others to avoid unnecessary litigation. It has
submitted that the Opposite Party No. 2 is not doing any business or profiteering
and whole purpose and aim is to help members to avoid long litigations
8.4 The Opposite Party No. 2 has further contended that it is a non-commercial
organization and none of its acts can cause infringement of Section 3 or 4 of the
Competition Act, 2002.
8.5 The Opposite Party No. 2 has also submitted that the DG has not filed the
documents supplied by it to the DG during the course of the Investigation. These
documents are (1) Agreement between Ashtavinayak and M/s Puri Sons, Jalandhar
for assignment of distribution right, dated 13.09.2010, (2) Circular by the Opposite
Party No. 2 informing its members regarding distribution rights vested with Puri
Sons, dated 24.10.2010, (3) Letter to the Opposite Party No. 2 by Puri Sons that
distribution rights vested with them, dated 24.10.2011, (4) Letter from Puri Sons
intimating the Opposite Party No. 2 of relinquishment of their distribution rights and
circular issued by the Opposite Party No. 2 that the picture was deregistered from
the name of Puri Sons, dated 28.10.2011, (5) the informant assigned rights to Eros.
and application from Eros received, dated 04.11.2011, (6) the Opposite Party No. 2
informed Eros that claim of Rs. 64,03,879 was received from the Opposite Party
No.1, dated 04.11.2011, (7) Eros issued separate notices to the Opposite Party No.
2 not to pursue the claim of the Opposite Party No.1, Eros wrote to the Opposite
Party No. 2 that claim against the informant had been settled with the Opposite
22
Party No. 1 dated 05.11.2011 and 11.11.2011, (8) Eros requested for registration of
the film in their name, name registered and circular issued, intimation of registration
sent to Eros dated 11.11.2011 and 14.11.2011 and (9) the Opposite Party No. 2's
circular intimating that picture registered in favour of Eros dated 14.11.2011.
8.6 As per the opposite party, the very fact that the informant settled the dispute with
Puri Sons and the Opposite Party No. 1 itself shows that the Opposite Party No. 2
was acting within its Memorandum and Articles, thus saving the parties of long
drawn out, costly litigation in civil course.
8.7 Further, the DG has not taken into consideration that the informant concealed that it
had already assigned the distribution rights of the film to M/s Puri Sons way back on
13.09.2010, and despite continuance of assignment in favour of Puri Sons, it had
again assigned on 18.02.2010 to Eros.
8.8 On the conduct of the informant, the answering opposite party has relied upon the
judgment of the Hon'ble Supreme Court in S.P. Chengalvaraya Naidu (Dead) by
L.R.s. v. Jagannath (Dead) by L.R.s & Ors. 1993 (2) BC 546 (SC).
8.9 The answering opposite party has also relied upon the advertisement issued by
Eros in Punjab Kesari in Jalandhar dated 06.11.2011 wherein names of various
cinemas (single screens and multiplex chains including PVR) where the film was
screened were mentioned. On the basis of said advertisement, the answering
opposite party has contended that there was no restriction on its part on the
releases of film Rock Star in the relevant territory.
9. The Commission considered the matter in its meetings held on 24.07.2012 and
09.08.2012. Mr. Vikarm Mehta, Advocate, Shri Ashwani Matta, Senior Advocate and
Ms. Mala Goel, Advocate appeared and advanced arguments on behalf of the
informant, the Opposite Party No. 1 and the Opposite Party No. 2 respectively.
10. The counsels appearing on behalf of the Opposite Party Nos. 1 and 2 contended that the
instant case could not be treated with the earlier cases as the Opposite Party No. 1 and
many other exhibitors had released the movie Rock Star in the area controlled by the
23
Opposite Party No. 2 even without registration of the film with the Opposite Party No. 2.
Ms. Mala Goel, Advocate appearing on behalf of the Opposite Party No. 2 has also
argued that it had neither asked its members not to release the film nor issued any
caution letter to its members. Ms. Goel has further argued that the Opposite Party No.
1 neither persuaded other members of the Opposite Party No. 2 not to exhibit the film
of the informant nor involved in the decision making process of the Opposite Party No.
2 and therefore, it had no role in controlling or restricting the film exhibition in the
territory of the Opposite Party No. 2.
11. Shri Ashwani Matta, Senior Advocate appearing on behalf of the Opposite Party No. 1
has argued that since it was not a party in the earlier cases, it was not appropriate on
the part of the DG to rely on the findings of the previous cases. Shri Matta has also
contended that findings of the DG report were based on the presumption and without
support of any material evidence. He has also refuted the findings of the DG with
regard to applicability of section 3(3) (b) of the Act on the ground that the Opposite
Party Nos. 1 and 2 were not doing similar business or trade and therefore, they did not
restrict or limit the market.
12. Shri Vikram Mehta, Advocate appearing on the behalf of the informant has argued that
the findings in the DG report are good and sound. Countering the arguments of the
Opposite Party No. 1 and the Opposite Party No. 2, he submitted that the Opposite
Party No. 2 allowed release of its film only after payment to the Opposite Party No. 1
was made. He stated that the Opposite Party No. 2 has only allowed four films to be
released during the year without registration.
13. Before proceeding further, it may be pointed out that in the present case the DG found
the conduct of M/s PVR Pictures i.e. the Opposite Party No. 1 in contravention of the
provisions of section 3(3)(b) of the Act as it was found to make written request to the
Opposite Party No. 2 for not allowing the release of one of films of the informant to
recover its outstanding money. The Commission observes that the said conduct of the
opposite party No. 1 in writing such letters to the association in its effort to secure its
alleged outstanding dues cannot be per se termed as anti-competitive. Furthermore,
the opposite party No. 1 in its individual capacity is not in a position to control the
business of distribution and exhibition of films and as such the Commission is of the
24
opinion that in the factual matrix of the case as projected, it is unnecessary to examine
in detail or to proceed further against M/s PVR Pictures in the present case.
Issues
14. The Commission has carefully considered the information, the DG report, the evidence
collected by the DG, the documents filed by the informant and the opposite parties as
well as the replies filed by the opposite parties. The Commission notes that following
issue arise for determination in the case under consideration:
Whether various acts and conduct of OP2 are anti-competitive as alleged in the
information and found by the DG in his investigation report in terms of section 3 (3)
read with section 3 (1) of the Act?
Determination of issue
Whether various acts and conduct of OP2 are anti-competitive as alleged in the
information and as found by the DG in his investigation report in terms of section
3 (3) read with section 3 (1) of the Act?
15. The allegation of the informant is that the OP 2 on the saying of OP1 did not register its
film Rockstar in its territory on the pretext that certain monetary claim of one of its
member i.e OP1 was outstanding towards the informant and it had received a
complaint from OP1. The informant had further alleged that the other associations
named in this case were also involved in the anti-competitive activities by imposing
restrictions on the producers/ distributors regarding release of the films, compulsory
membership, compulsory registration of films, pressuring the distributors/ producers to
settle the dispute with their members and restriction on satellite release etc.
16. On the basis of the facts and evidence gathered during the course of investigation, it
was noted by the DG that OP1 and OP2 had violated the provisions of Section 3(3) (b)
of the Act. The DG did not find any violation of the provisions of the Act by the other OP
associations in this case. The DG has also reported that the other associations against
whom the informant has alleged anti-competitive conduct were not found to be
25
imposing any restriction on the release of the film Rockstar. However, the DG has
reported that the conduct of these associations including the OP2 had already been
investigated by his Office and declared anti-competitive by the Commission in Case
Nos. 25/2010, 52/2010, 56/2010 and 56/2011.
17. At the outset, it may be pointed out that aforesaid conduct of the trade associations has
already been declared anti-competitive by this Commission in the case Nos.52/2010,
56/2010, 25/2010 and 56/2011. Apart from imposing the penalties on the associations
involved in those cases, the Commission had also ordered the concerned associations
to cease and desist from such type of anti-competitive practices. The Opposite Party
No.2 was also one of the opposite parties in case Nos. 25/2010 and 52/2010.
18. In view of the above and as the informant has not provided any evidence against these
associations, the Commission holds that the Opposite Party Nos. 3 to 18 have not
imposed any restriction on the release of the film Rockstar and, as such, their conduct
need not attract the attention of the Commission any further in this case.
19. Now, coming to the issue as to whether various acts and conduct of the Opposite Party
No. 2 are anti-competitive as alleged in the information and as found by the DG in his
investigation report in terms of section 3 (3) (b) read with section 3 (1) of the Act, the
Commission notes that the DG has reported that the allegations in the instant case are
similar to case Nos. 52/2010, 56/2010 and No. 25/2010 where one of the Associations
threatened the producers to make the payment of the outstanding amount of its
member failing which the film may not be released in its territory.
20. The issue under discussion requires examination of two aspects. One is related to the
complaint dated 24.10.2011filed by M/s Puri sons with the Opposite Party No. 2 and
the other is related to the complaint filed by the Opposite Party No. 1 to the Opposite
Party No. 2. First, the complaint filed by M/s Puri Sons may be examined and
discussed. As per the investigation of the DG, the information and the replies filed by
the opposite parties, the film Rockstar was earlier given for distribution to M/s Puri
Sons by the informant but the film was also given for distribution to M/s Eros i.e. the
Opposite Party No. 18. On M/s Puri Sons filing a complaint with the Opposite Party No.
2 regarding the same, the Opposite Party No. 2 issued a circular to its member
26
cautioning them in the matter and also issued a letter to M/s Eros to stop approaching
the exhibitors for exhibition of the said film. However, the informant settled the matter
with M/s Puri Sons and rights of the said film were relinquished by M/s Puri Sons in
favor of M/s Eros. M/s Puri Sons vide its NOC dated 28.10.2011 also intimated the
Opposite Party No.2 regarding its no objection for the registration of the said film in
favor of M/s Eros.
21. The Commission notes that no anti- competitive conduct can be attributed to the
Opposite Party No.2 when it issued the letter dated 24.10.2011 to M/s Eros and its
members thereby intimating them that it had received a complaint from M/s Puri Sons
regarding registration of film in its favour for the same territory. The said conduct of the
Opposite Party No. 2 is justified as registration of film simultaneously with two
distributors would have caused confusion in the minds of exhibitors and could have
also raised dispute between the informant, M/s Eros and M/s Puri Sons. Otherwise
also, the Commission observes that the said conduct of the Opposite Party No. 2 has
not resulted into any kind of restriction on the distribution of the film Rockstar in any
manner.
22. In view of the above discussion, the Commission is of the considered opinion that no
contravention of the provisions of section 3 of the Act is made out against the Opposite
Party No. 2 on this count.
23. Now, the complaint filed by the Opposite Party No. 1 with the Opposite Party No. 2 may
be examined to ascertain any anti-competitive conduct in this process. In this regard,
the Commission observes that it is the admitted case of the Opposite Party Nos. 1 and
2 that the Opposite Party No.1 had filed a grievance with the Opposite Party No. 2 vide
its letter dated 27.01.2011 for some of its alleged outstanding dues pending with the
informant. The relevant portions of this letter are reproduced hereunder:
"We had acquired the distribution/ exhibition & exploitation rights of the above
referred picture Khatta Meetha for the territory of East Punjab from M/s Shree
Ashtavinayak Cine Vision Limited vide agreement dated 22.06.2010 on
Refundable Advance basis.
27
The film was released in the above circuit on and from 23.07.2010 along with
all India Release. The film was not accepted by the audiences and therefore
met with unsatisfactory result leaving a huge amount of Rs. 61, 41, 895/-
towards un-recouped/ unrecovered advance amount out of the total advance
amount of Rs. 2, 15, 00, 000/- paid to the producers in account of the said
circuit of East Punjab. The said payment is not being refunded to us by the
producers, in spite of our repeated requests and notices.
We therefore file our claim against the producers M/s Shree Ashtavinayak cine
Vision Limited, Mumbai, its directors for a sum of Rs. 61, 41, 895/- plus
interest of Rs. 2, 60, 484/- calculated up to 31.12.2010 plus Claim Fees of Rs.
1500/- total amounting to Rs. 64, 03, 879/- (Rupees Sixty four lac three
thousand eight hundred seventy nine only). Our claim shall be applicable
against their forth coming picture Run Bhola Run releasing from 4th of Feb.
2010 onwards and any future production of M/s Shree Ashavinayak Cine
Vision Limited, Mumbai , its directors, wherever involved directly or indirectly,
which please note.
You are requested to please look into the matter immediately and please
ensure that the picture Run Bhola Run is not registered or allowed to be
released till the settlement of our claim in full and final."
24. A bare perusal of the said letter reflects that the Opposite Party No. 1 had requested
the Opposite Party No. 2 for ensuring that the upcoming film of the informant viz. Run
Bhola Run should not be registered as certain dues of the Opposite Party No. 1 were
outstanding towards the informant.
25. On receipt of the said complaint, the Opposite Party No. 2 issued a letter dated
12.02.2011 to the informant seeking its comments. The informant, in response to the
said letter, replied that the Opposite Party No. 2 has no jurisdiction to look into the
matter. Thereafter, when another film of the informant viz. Rockstar was slated for
release and the distributor M/s Eros filed application for registration (after the
settlement of dispute with M/s Puri Sons) with the Opposite Party No. 2, the Opposite
28
Party No. 2 issued a circular dated 24.10.2011 to its members. The contents of the said
circular are reproduced herein below:
"A complaint has been received from M/s PVR Pictures Ltd. against M/s Shree
Ashtavinayak Cine Vision Ltd. with regard to picture 'Khatta Meetha'. The complaint is
being processed".
26. The Opposite Party No. 2 also issued a letter dated 04.11.2011 to M/s Eros directing it
to resolve the matter relating to the claim of the Opposite Party No. 1 and to deposit the
amount immediately on receipt of the said letter for enabling it to process the pending
application for registration. The contents of the said letter are reproduced hereinbelow:
"Pleases refer your application for registration of the above picture dated 04.11.2011.
In this context, we write to inform you that the picture stands registered with us in
favour of M/s Purisons, Jalandhar who has relinquished the rights and the liabilities of
the picture has been called the last date of which is 08.11.2011. Moreover, there is a
claim of M/s PVR Pictures Ltd, Jalandhar against M/s Shree Ashtavinayak Cine Vision
Ltd, Chennai for Rs. 64, 03, 879/- inclusive of interest upto 31.12.2010, who is the
producer of the above picture. You are requested to please resolve the matter and
deposit the amount with us immediately on receipt of this letter to enable us to proceed
further. Meanwhile, your application for registration of picture ROCKSTAR is lying
pending with us at your risk, cost and responsibility which please note. "
27. Ex facie, the contents of the aforesaid letter reveal that it was issued to pressurize the
informant to settle the matter with the Opposite Party No. 1. On this aspect, it was
submitted on behalf of the Opposite Party No. 2 that clause 3(g) (v) of its Memorandum
of Association provides for settlement of business disputes of its members. The
Opposite Party No. 2 has also pleaded that it was working like an arbitral forum to
settle the disputes between its members. The plea is misconceived and not tenable.
The Commission is of the view that the Opposite Party No. 2 in the garb of acting as an
arbitral forum for its members cannot engage itself in a conduct which is contrary to the
provision of the Act.
29
28. The Commission also observes that the information was filed on 04.11.2011 by the
informant and the case was fixed for hearing on 08.11.2011. The film ROCKSTAR was
released on 11.11.2011 and the outstanding dues were paid by the informant to the
Opposite Party No. 1 on 10.11.2011 i.e. one day before the release of the film vide a
banker cheque dated 09.11.2011 of Rs 73, 96,266.00(Seventy-three lakh ninety-six
thousand two hundred sixty-six). However, the film was registered with the Opposite
Party No. 2 after three days of its release. In its reply/ objection to the DG report, the
Opposite Party Nos. 1 and 2 claimed that the Commission while hearing the case on
09.11.2011 directed the informant to repay the un-recouped advance along with the
interest to PVR Pictures. In this connection, the Commission notes that the order under
section 33 of the Act in this case was passed by the Commission on 18.11.2011
whereas the payment was made by the informant to PVR on 10.11.2011 i.e. one day
before the release of the film. Further, in the order of the Commission, no such
direction to the informant regarding making payment to the Opposite Party No. 1 was
issued.
29. The Opposite Party Nos. 1 and 2 have also contended that the film was released
without registration with the Opposite Party No. 2 and the registration was done three
days after the release. Thus, it is sought to be contended that there was no restriction
on their part on the release of the film. The Commission notes that the main grievance
of the Opposite Party No. 1 was the outstanding amount towards the informant and not
the registration of the film. The circular dated 24.10.2011 and the letter dated
04.11.2011 issued by the Opposite Party No. 2 to its members and M/s Eros
respectively, reflect that the Opposite Party No. 2 had an objective of settling the
dispute between the Opposite Party No. 1 and the informant by the adopting the
pressure tactics of keeping the registration of the film pending. The Commission vide
its orders in Case Nos. 25/2010, 52/2010 and 56/2010 has held that the compulsory
registration of the film with the concerned trade associations is anti-competitive in
terms of the provision of section 3 of the Act. The orders in the said cases were passed
on 16.02.2012 and the Opposite Party No. 2 was also one of the opposite parties
therein. The Commission further notes that the outstanding dues were cleared by the
informants on 10.11.2011 and the film was slated for release on 11.11.2011. In these
circumstances, the Commission is of the view that since the compulsory registration of
the film with the trade association was declared anti-competitive only on 16.02.2012,
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there was an in-built pressure on the distributor to register its film with the concerned
association as the film could not have been released without registration. In the
aforesaid factual scenario, the Commission is of the view that the argument that there
was no restriction on the release of the film Rockstar is misconceived and it is held that
the conduct of the Opposite Party No. 2 in issuing the circular dated 24.10.2011 and
the letter dated 04.11.2011 to its members and M/s Eros respectively is restrictive in
nature.
30. It may be further noted that provisions of section 3(3)(b) read with section 3(1) of the
Act stipulate that the acts and conduct specified therein raise a presumption of
appreciable adverse effect on competition. However, the parties against whom such
presumptions are raised are free to rebut the same with their own sets of evidences
and arguments. In the present case, the Opposite Party No. 2 has not been able to
dispute the facts of the case regarding issuing of circular and letters by them relating to
the registration of film and the settlement of the dispute between the informant and the
Opposite Party No. 1.
31. Notwithstanding the above presumption, the DG analyzed the factors enumerated in
section 19(3) of the Act in detail to determine whether the agreement has an
appreciable effect on competition. In this regard, the Commission notes that the
opposite party No. 2 has not been able to refute the competition assessment
conducted by the DG.
32. The Commission has already observed in Case Nos. 25/2010 and 52/56/2010 that the
activities of an association may benefit their members and also play a significant role in
encouraging and enforcing codes of ethics. These activities may include keeping
association members informed of trade developments, improving the quality of
products, and working together at improving trade and industry laws. Cooperation,
education and information exchanges through trade associations may also lead to
technological advancements.
33. On the facts of the present case, the Commission observes that the acts and conduct
of the Opposite Party No. 2 do not bring in any improvement in production or supply of
films in any manner or bring any technological improvements.
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34. In view of the above, the Commission holds that the acts and conduct of the Opposite
Party No. 2 instead of bringing in pro-competitive effects have caused appreciable
adverse effect on competition.
35. As noted by the Commission in Case Nos. 1/ 2009, 25/2010, 52/2010 and 56/2010,
activities of film associations which limit supplies of films are anti-competitive under
section 3(3)(b) read with section 3(1) of the Act .Besides, penalties were also imposed
in those cases.
36. In light of the foregoing, the Commission holds that the Opposite Party No. 2 has
contravened the provisions of section 3(3)(b) read with section 3(1) of the Act.
Order under section 27 of the Act
37. The Commission directs the Opposite Party No. 2 to cease and desist from the practices of pressurizing the distributors to settle the monetary disputes with its members. Further, as the opposite party No. 2 has already been directed in Case Nos. 25, 52 and 56 of 2010 inter alia to suitably modify its Articles of Association, rules and regulations to remove the condition of compulsory registration of films as a pre- condition for release of any film and as such it is not necessary to pass such directions again in the present case.
38. It may be pointed out that NIMPA was also a party in Case No. 25 of 2010 where its by-
laws prohibiting members from dealing with non-members; making registration of film compulsory before release; observance of hold back period for exploitation of films through other media; and conduct of issuing letters threatening non-registration of film if previous claims are not settled etc were found to be anti-competitive. Accordingly, the Commission apart from issuing a cease and desist order, ordered modification of the said by-laws in the said case. A penalty of Rs. 2,84,501 was also imposed upon NIMPA. In Case Nos. 52 and 56 of 2010, in which NIMPA was one of the opposite parties, as similar issues were involved, the Commission did not impose any penalty upon NIMPA. In the present case also, the acts and conduct of the opposite parties including NIMPA are found to be similar as in Case Nos. 25, 52 and 56 of 2010. Specifically, letters were 32 issued by NIMPA to the producers for pressurising the parties to settle the dispute with the members. In the letter, it was clearly indicated that registration of the film in question shall be kept pending till the time the disputed amount is deposited. As such, the conduct of NIMPA in the present case also is similar to its conduct in the other cases and emanates out of its offending by-laws which were directed to be modified in those cases. It may be pointed out that NIMPA has already complied with the order of the Commission in Case No. 25 of 2010 imposing penalty and an appeal against the said order is pending before COMPAT. As the Commission did not find it appropriate to impose penalty upon NIMPA in Case Nos. 52 and 56 of 2010 as a penalty was imposed upon it in the previous case i.e. Case No. 25 of 2010, it is unnecessary to impose any penalty upon NIMPA in the present case as well.
39. The directions in para 37 above, should be complied with immediate effect and the opposite party No. 2 is also directed to file an undertaking to this effect within a period of 30 days from the date of receipt of this order.
40. The Secretary is directed to communicate this order as per regulations to all the concerned parties.
Sd/- Sd/- Sd/-
R. Prasad Geeta Gouri HC Gupta
(Member) (Member) (Member)
Sd/- Sd/- Sd/-
Anurag Goel M. L. Tayal Justice (Retd.)S.N.Dhingra
(Member) (Member) (Member)
Sd/-
Ashok Chawla
(Chairperson)
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