Competition Commission of India
Utv Software Communications Limited, ... vs Motion Pictures Association, Delhi ... on 8 May, 2012
Before The Competition Commission of India Case_l\_lo. Q9[;Q:l.1 Date oforder: o 9 l"'°'j :15' 3 3' UTV Software Communications Limited, Mumbai Informant Against Motion Pictures Association, Delhi Opposite Party Order under section 27 of the Competition Act, 2002
The present matter relates to information filed by UTV Software Communications Limited (hereinafter referred to as informant) alleging that Motion Pictures Association, Delhi (hereinafter referred to as the Opposite Party or MPA) has abused its dominant position in contravention of provisions of section 4 of the Act.
7.. The facts and allegations in the matter as per information, in brief, are as under;
2.1 The informant, a company registered under the Companies Act, 1956, is a producer, title holder and distributor of feature films. The informant's 'fl,#m.=e..--..,,_,,'_§% portfolio includes Hindi, Re 'K ation films. It is also associated 0° 1" 'S6 with international roduc id'r:t§2fi$ " r?) "u tions. E " ,v~ fit "3 '18?
(.3 « git var-
2.2 The Opposne Party is an associatAi:,o=,n?ié;gi,st»ered under section 2':'5_of the f \ Companies Act, 1956. The OP as a body_has been formed to promote and assist the business of production, distribution, exhibition of films and also to provide a common forum to its members to nieet and address their "
problems. The members of the OP are engaged in the business. of production, distflbution and exhibition of films». The OP governs the -arena of distribution and exhibition of motion pictures in the territory of Delhi, Uttar Pradesh and Uttarakhand (hereinafter referred to as "territory"). 2.3 It has been alleged by the informant that the OP is abusing its dominant position by imposing unreasonable terms and conditions vide its Memorandum of Association and Articles of Association. The said unreasonable terms and conditions limit the production, supply, distribution and exhibition of films in the areas of operations of the OP. 2.4 As per the information, the OP forces its members to sign a Producer Distributor Certificate and an Acquiring Form for the purpose of registration of the films. The aforesaid Certificate and Form contained conditions such as unreasonable hold back periods i.e. period between the first theatrical release of cinematographic film till the said cinematographic film is distributed through other media for viewing such as satellite exhibition of films, on demand viewing, compact discs, internet etc. In case the above certificate is not signed by the members then their films cannot be registered and subsequently not allowed to be released in the areas of operations of the OP.
2.5 According to the informantksth-e..A"cquiring Form contains some <:\'~(T'l\. "
ax ' * ,,p'IuS"'COl'TllTlel'Clal video rights through anyi,,m§g,i,a. including viijeo,pa.=~:m;ir 'rights and telecasting rights to the distributor and imposes a 'noldback ' producer/suppliers and distr*ibo'tors' "t'o"sign "the declaration"
period of 5 years. The OP has made it mandatory for the and .underta.l<.ing for registering a film withit priorto the release of the filmin »-the t~eiristoi'\,-'. "i he said Forrn has to be -signed by the memtwers without any "Opposite Party;
corrections or cuttings.
2.6 The informant has alleged that the OP through the agreements reflected in its Memorandum & Articles of Association, mandates its members not to deal with or to do business with persons engaged in the exhibition and distribution of films (i) who are not members of the
(ii) whose membership has been suspended or terminated; or (iii) members who have distributed a non--registered film. it is also alleged that the decisions and actions taken by the Opposite Party limit, control and restrict the distribution, exhibition and exploitation of films in the territory.
2.7 Further, the Film Acquiring Rules prescribe the penalty in case of premature satellite telecast of films in violation of the undertaking given by the producers/distributors. The executive committee of the Opposite Party has decided to levy a penalty on the members for alleged premature satellite telecast of films according to the grades/categories of the films. The picture/film is graded into four categories viz. 'A', 'B', 'C' & 'D' and a penalty of Rs. 2 lac, Rs. 1 lac, Rs. 50 thousand and Rs. 25 thousand, respectively, is imposed, depending upon the category of the film. 2.8 The informant has given E'? Ci A ' 'A:
registration of its films with to ,ei;~',§:»l5\,i ' <73 , Q is,» E:
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antiA~»7com'pe'ti«tive. As per the information, on Augiist 14, 2l'J,10,,,\the,;"I" informant received a letter from the OP in relation to the registration of its_ film "Peepli Live" for exhibition vide which the OP wanted the informant to furnish a few cletailsiri the Forn'ii'whi"c'ri"F'iad not been disclosed. in that a letter it me-ntifoned that penalty had been -levied on the informant for .
-'a'il'eg'ed premature satellite telecast 'ofrits'"fii"ri'is "Riar2g.De Basanti", "'/"».arnir", "Mumbai Meri Jaan", "Jodha Akbar", "Kismat Konnection", "A Wednesday", "Fashi_on", and "Kurbaaan" for an amount of Rs. 2,00,000/--, Rs. 50,000/--, Rs.1,00,000, Rs.2,00,000, respectively, and the informant was asked to comply with the same.
2.9 According to the informant, thereafter it addressed a letter dated January 6, 2011 to the OP, enclosing a filled Form for registering its film "No One Killed Jessica" and stating that the clauses mentioned in the certificate (which every distributor is required to submit to the OP for registering a film before its release) were misrepresentation of the rights and the arrangement of business between the informant and the distributor.
2.10 The informant, in the form enclosed along with the letter dated 06.01.2011 to the OP, struck off the provisions and clauses which were non--applicable to them and the distributor as far as their business arrangement and nature of the rights being transferred was concerned. The OP in its letter dated January 12,2011 stating that since page nos. 3 & 4 of the form was found crossed with respect to Video rights, Telecasting rights, Declaration and Undertaking, asked the informant to submit a fresh along with a fresh affidavit as 'V Wt, x8/»\ -.,/»~._ was not as per the OP's 'Jr 'if 1 E5 '.', prescri,b£%.d.forn1. The OP also.rei1;erate=d...the,.ordersto p?;},:' the .p,enaity___ which was mentioned in the letter dated August 14, 2010. 2.11 in response to the aforesaidletter, the informant addressed another if!" ' ' .._., - -= --;~- s.- .;.'.- -s - .. :;...- ,,:,,: ; .,, let_c:. ci,ao.e-:fi J33":-J:.':",' .142, 20.1,}. U3 use L-la reitcnaung Mb E.!U_!eCtlG-Ii? ~\«"=.!'l.t~i°n\ "' 5 ,. J' -.'r . _ respect to the ten 5 and conditions mentioned in the Certificate. On January' 17, 2011 the informant wrote another letter vvhich was identical to the let.ter addressed to the OP dated January 14, 2011, with respect to the registration of the film "Dhobi Ghat" which was scheduled for release on January 21, 2011. The informant also brought out that it was not commercially viable for the distributors and/or producers to adhere to such irrational holdback periods, as it would adversely affect the other revenue streams of the films resulting into heavy losses to the film producers and/or distributors. in light of the above, the informant once again cancelled all the provisions in the registration form, which, were contradictory to the terms which the informant had agreed upon with the producers(s) of the aforementioned film. The Opposite Party responded vide letter dated January 22, 2011 with reference to the registration form for the informant's film "No one killed Jessica" mentioning that fresh Form for the aforesaid film's registration had been sent to the informant and it should comply with the same format as it had been doing in the past. 2.12 As per information, thereafter, the informant through its counsels addressed another letter dated January 28, 2011 with regard to the registration of the Film "No One Killed Jessica" in the territory highlighting the fact that the imposition of penalties on it was illegal. Subsequently, the OP issued a circular dated Feb ZW2011 declaring the informant's ;
o > eefithe informant had failed to '~anr;_i the iriformant tha't*'oh fai'ling to comply with the instrulctio'ns' 's "
to the il"ifi3E""
.:d"nply with the rules and l'_€gUlr23t,lQl:l5-Of..it'{7t.9 OP. The OP \/ide'lette_;L:.Ld,a'jc¢d.,_ . February 15, 2011, addressed to the informant declined registration to their film "7 Khoon fl/laaf" which was to befireleased on February 18, 2011 given in letters dated .?anuar«-,~' 22,2011 and February 12, 2011 arldressed. _ .na':it regarding the terms and conditions laid dc-wn in: the Form, the informant's name would be removed from the membership of the association.
2.13 Based on the details of correspondences as above, the informant has averred that the rules framed by the Opposite Party are anti--competitive. The informant has submitted that lndian law permits freedom of contract between any two parties. The counter parties to producers are distributors and not the Opposite Party which is an association. However, the OP imposes such terms upon the producers, which are illegal and which results in a situation wherein although the producers have freedom to contract in law, they are unable to exercise this right, in view of the illegal terms and conditions imposed by the OP. 2.16 According to the informant, any condition imposed by the OP that interferes with freedom to contract and/ or is anti--competitive or violative of the rights granted to the informant under law are illegal and not binding on the informant in as much as they limit and control the supply of the film in different formats in the market, contrary to the provisions of the Act.
These conditions are unreasonable in as much as it is not commercially viable for the producers/distributors to adhere to such irrational holdbacks especially i _;_~§::§ur.rent market scenario when the \.__!.\.l_;,'f,;.~ "lag mm/;~ .i>>~*;~ . . . .
ft .1T§'c3;,i»2ifi trical release IS for a limited
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.. ..1.,,,'.~., "'a'g'ree"m"e'n ts:,Wthe*~'O'P'"i's= ' r period.»Tlm<re:w.ill-be»no mavrketf-'o:r.I;"l p }e..fi.lfm.s, after 5 years.o?f the rele.ase..of .. _. .. such films and therefore the holdback effectively shutslfout/bars, adversely affects the exploitation of the ' Maura -- .1'.-Qt.' the film and imposing unreasonable term .~ _H-Bhbst .'...._..
informant that the unfair t through its Memorandum an films through satellite exhibition etc. v- ,',«,i»-\ V-M-\s .
.-. -u-'°».'~'-'- ~., '-',',,'.s ...«.(.~.. _-,.. s and conditions, as set out inthe mu,L4' .
to tin iu st=l-y-«e erms and conditions imposed by the OP, d Articles of Association, the Certificate and the Form, are restrictive in nature andlimit and control the supply of films in the market. Further, the letters and circular(s) issued by the OP, declaring the films of the informant in the territory as non--registered and warning the informant against releasing the same under the threat of its membership being terminated restricted the supply of the films of the informant in the territory. According to the informant, the Memorandum and Articles of Association of the Association, the Certificate, the Form are in complete violation of section 3 of the Act. 2.15 The informant has further brought out that in the present case, the dominant position is that of the OP, who by virtue of its position of strength, im posed penalties on the informant through its letters and issued a circular by which the OP was able to compel the theatre owners/ producers/ distributors/ exhibitors to abide by its unfair and discriminatory restrictions of not releasing any films of the informant in the territory. The action of the OP of issuance of a circular against the informant resulted in denial of market access to the films of the informant in the territory and hence the s /{\_\
(b) (c) and (d) of the Act. Fu mm, gw ""'*ux\.,_ covered by section 4 (2) |q'Q': 0° ' I <2;
3W0 O m posing «mp e;nsaltires;:<~not~~tegi ste ng -.. f '13:'. gr. 4; . ,_. ,.,~,' '.-
" i"nf'o'Fmant""s'fundiairnental right to"frieeYirrt.«n§,defiarnd profession has "been limited and restricted which is prohibited under section 4(2)(a) of the Act. According to the informant, the OP has also contravened section 4 (2) (e) m.-- ' _,by,,3b,ii.si_n,géi1:,s g rninanktp_,,positi_o'ri.%(to dipsgrifiminatefiagainst exhibition at f of films ..t._ .. »,»..,_i.. ,..5--.,..
in férmats includ'ing"satellite' ex=l1i.b,iti'on_jags-- ag;a«_inst theatrical exhibition of .A--, av '.'m...g-new-zu W; . ._,, 2.16 The informant has brought out that the cause for filing the present information arose when the association issued a circular dated February 14, 2011 declaring the informant's film "7 Khoon Maaf' unregistered, alleging that the informant had failed to comply with the rules and regulations of the OP. All the members of the association were asked to make a note of this. Further, the informant also received the letter dated February 12, 2011 to the effect that its name would be removed from the membership of the association if the terms and conditions were not agreed to.
2.17 The informant also submitted that time and again vide various letters it asked the OP to resolve the issue and arrive at an amicable settlement and pointed out the non--applicable clauses in the Acquiring Form, but the Association was not willing to look into the issue. 2.18 The informant further expressed its' apprehension that it had numerous films slated for release, which either it was co--producing, distributing or had an arrangement to distribute and that no distributor/ sub-distributor/ exhibitor in the territory might deal with it in the event the circular issued by the OP against it was not withdrawn. Further, if the rat " any distribvutor/exhibitor from exhibiting the film 'Guzaarish' in the 2.19" The informant also prayedthat inscase-sN<;>,,£.;,58/2010, titled as 'UTV.s-. Software Communication Ltd. v. Bihar and Jharkhand Motion Pictures Association, the Commission had passed an interim order dated ' November__'18, 2011 restrainvirig Bihar &glharkhand Motion Pictures' ' ., :-_ ' . 'Ass0ciation""from imposing ~«similar~»res-trgictions or conditions-, to prevent A *:;i.«» .- an-e~,~ »n.,, territory of Bihar and Jharkhand. Hence relief may be granted in the instant case as well restraining the OP from imposing any restriction on exhibition of the forthcoming films of the informant.
3. After considering the information, the Commission found that there existed a prima facie case in the matter and accordingly passed an order dated 16.03.2011 under section 26(1) of the Act, directing DG to conduct an investigation into the matter.
4. Investigation by the DG, CCI 4.1 The DG after receiving the order under section 26(1) of the Act investigated the matter and submitted his report dated 19.08.2011 to the Commission.
4.2 For the purpose of investigation, DG relied upon the facts and evidences collected during the course of investigations against the Opposite party in case nos. 25 of 2010, S2 of 2010 and 56 of 2010. Apart from the Opposite Party and the informant, information was also collected from third parties apart from evaluation of materials in public domain. 4.3 The investigation of D6 has revealed that to carry out the business of film distribution in the territory ,-g«a;r,1,\(r;:,:axsspciation it becomes essential for a distributor to take the me Q
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O ghefwi e one may not be able to do ;;7\\_.',: ' I Q» __almost in"ipossib_iefto survive the film distribution business wiithout T I the business smoothly. Althoig_;gh,,..as per its Articles o.£§.;:,Associat»ion, the membership is voluntary but as almost all the distributors are its members and since the members are not allowed to deal with non-members, it is becoming the 'member of the associeationa»-B.a.sed on his investigation, [)6 it has 'co'ncludeo'- that mo3't of the*~di=stri'butors--'-and ex'hi'bitors of Delhi, U-Pi & lJttarakhand territory are the members of MPA which makes its position so powerful that no film distributor can carry out the business of film distribution in its territory without becoming its member. 4.4 According to DG, rule 14(x) in the Memorandum of Association of MPA, relating to cessation of membership on account of activities prohibited by the MPA is restrictive in nature. The said rule brings out as unden "Dealing with a non-member/s by members screening of films registered in favour of members under suspension and/or removed by the "association or screening of a film at a cinema suspended and/or removed from the membership of the association and/or admitted as member".
4.5 DG also found that the abovementioned rule clearly prohibits the members of MPA to deal non--members.
4.6 The investigation by DG also revealed that l\/lPA has framed various rules for registration of films. These rules put certain restrictions on the producers and distributors of th_giilms. Any producer or distributor /;"?t':<t?:--iii%ii' ».é<>t (Fl!\'E(Dli'3(9:(3)5 ~ xorff de:;i;ri'r:;.;j to do business in t '4"-.7 x-«DC-lahas bi=ought out that for. the Ipurpo "film-registered and also abide by theivggglessanda regulations frartiyedgaforithis purpose. Further, it is practically impossible to release a film without following the registration clause of the Association. '..
A wdistributor «has to fill a prescribed"~'p«roéfor'mas'«also-scaiied as "Aequti.ring form". It is necessary to fill this form by producers. distributors before release of every film in each territory, mentioning the details of film agreeing for certain conditions or declarations. Most of the clauses of this form impose certain restrictions on the producers and distributors. in addition to this, acquiring form and affidavit containing undertakings as per the prescribed proforma are also obtained from the producer at the time of registration. The opposite party makes it mandatory to register every film before release in its territory. 4.8 According to DG, rule no.16 of articles of association of MPA imposes restriction on its members not to deal with non-- members and do business with the registered films only. The rules of Association thus compel a film distributor to become member and register the film for distribution in the territory of MPA, Delhi.
4.9 DG has also submitted that since MPA makes it mandatory for its members to deal with the registered films only, it becomes mandatory for every film producer and distributor to go through the process of registration to release their film in the territory under its control. The .«v""'°'flM investigation by DG also revea at F A 1 ~~'V."
4';
. ....t.m:_\m{« register the film "7 Khoon se of r_egis.t.rati,on, the " "aff-i-davit in the pro--forma' piresc-ribied by The OP iss.tied._an_i.nt§_r3n.al circular on 14.02.2011 intimating its member to note that the film '7 Khoon lvlaaf' was unregistered. By issuing such circular the OP gave a _me_ssage to all the exhibitors to not deal with the iinregiistered fiim. Since 't'l>ir:e~fi'lm*was' due for release the:~lnform~ant had no choice but to accepigill-§3..,....',,...._. ' M__V__cluifriect_i_'c3in_l'of MP/-\ and to submit the 'req'u'isi-te documents for srnootn - release of the film.
4.10 During the course of investigation, it was also found by DG that the OP was putting restriction of time limit for broadcasting/releasing a film on satellite/television/cable/radio etc. on the producers. These restrictions are invoked by way of taking declarations through the Registration Form or the Acquiring Form and an affidavit. If the informant does not abide by the conditions laid down in the Registration Form, the OP refuses to register the film which affects the film distribution business. 4.11 DG has further submitted that when a producer grants the theatrical exploitation rights to distributor, an agreement is entered into between the producers and distributors in which various details relating to the theatrical distribution of a film in the territories of India are mentioned. in this agreement producers and distributors mutually agree for a period before which the satellite/television/video release of film would not be done. These decisions are taken on the basis of business conditions, market requirement, etc. However, when the film is given for registration in a particular territory the Association imposes its own conditions r _:--.
rs.nr,'i,;_:?'., T .,,",l restrictions in respect of the Satellite/TV/Video release of films. it was stated that these conditions are forced on the basis of a joint agreement b pf the Associations of distributors.:and_v!_produ'cets_. One of such 'agreeménfcs '" ente-re.~5d~-on 1006.199/lv betw.een~~.F~i;l'i_n Distributors.' CoL.i.n.cil.:(an,._apex"-.
""body'Mof Ai*l'i'ndia Film Di~stribu'tors.including Motion Pictures Association, ,. Delhi; Northern Motion Pictures Association, Jalandhar; IMPDA, Murnbai; CCCA, Bhusabal; BJMPA, Patna and Eastern India Motion Pictures Association, Kolkata) and Film Makers' Combine (an apex body of film producers). This agreement was entered into with an objective of regulating and fixing the time period of film exhibition through video cassette, cable TV. The salient features of this agreement are as under:
1) No producer shall deliver or cause to be delivered Video Cassettes for home viewing video rights for a minimum period of two weeks from theatrical release of the film in India.
2) No producer shall sell or dispose of Cable T.V. rights in any manner directly or indirectly for telecast for a minimum period of six months from the premier theatrical release in lndia.
3) No telecast of picture on any channel of Doordarshan or satellite T.V. directly or indirectly before the expiry of five years from first theatrical release.
4) Films will be acquired for a minimum period of ten years.
4.13 According to D6, the associations have provided a fixed time gap in their form for registration, which ranges.-Jiizorg 6 months to 5 years and do V >"'~.,_t reement between the and distributors sign :-«T4;12vAccoeaelxi-ng to DG, it was a--cc'epted.;by the v.OE,«.«...that.. it was imposing. ., thes'e"""registratiorrtfofms to ensure -the 'r€g'i's:tr.ation for.sm.ooth. rei.ease..0f__. . their films, these associations take action if the time gap as per their registration form is not honoured by the producers. The OP has formed the rules relating to 'Him Agcquiring'; by in/flaylgiafi resol'utio'ns of'Executive "Co3'ri'{mitte'e'. "These rules rprescribe.'r'»teh-e.;::i;d'etails of fees charged». for'... Registyrationhfof films as well as" 'the 'iam'ou"nt of penalty "for violation of conditions relating to telecast of films on satellite. 4.15 During the course of investigation, it was found by DG that the MPA was issuing letters to producers and distributors mentioning that in case of non--compliance of its conditions the film might not be registered or recoverable sum of penalties on violation of their directions might be imposed upon them. In this regard, to support its contention, DG has cited letters and circulars issued on 12, 13.01.2011, 12.02.11, 14.02.11 and 15.02.2011 issued by the OP.
4.16 DG has concluded that the OP has been pressurising through its letters and circulars to accept the conditions relating to the Registration of films to the informant. The informant had requested the MPA while submitting the application for registration of film 'No one killed jessica' to remove its conditions relating to time gap for the satellite telecast of films. The distributor, M/S A.A. Films was also in agreement with the informant on this issue. However the OP denied modifying or cancelling the conditions mentioned in the Acquirin mm g form. Ultimately the informant was «E Afterconsidering the replies "and, evidences produced an_cl_gathereti during investigation, DG has concluded that the following rules & regulation and activities of MPA contravene the provision of section 3 of ' A , the ';'C9'Wi}".)€'l_'.lJC-lOi'l Act:
(i). , Restriction on memlbers to dyealpgwith .r.ig.n:memt>ers -- Para 14_(x) and", v 16Aof the lV|eri~.orano'um &. Articles of Association of MPA. prohibits dealing with non--members. These provisions practically make it impossible to carry out the business of Film distribution.
(ii) Compulsory Registration-- As per rules 16(i) of Articles of Association "no member of the Association shall distribute/supply and/or screen any picture unless it is registered with the Association. No picture shall be obtained/supplied by the members from/to a non~ member. The restriction under these articles shall apply to all films in Hindi/Urdu/Punjabi/Bhojpuri/Haryanvi/Brijbhasha/Awadhi.
(iii) imposing Penalty and taking disciplinary actions--Under rule 42 of the Articles of Association, there are provisions which give power to take action against such members, who violate the rules of MPA.
(iv) issuing interim circular among the members like letter dated 14.02.2011 regarding film '7 Khoon Maaf' and other letters vide notices dated 15.02.2011, 12.02.2011 to pressurise the informant to submit the acquiring form and affidavit for registration as per its conditions.
(v) imposing conditions and terms on screening of a film on satellite/DTH not before certain period from the date of premier release in the country.
I _ ny,,.«w»=----x-».:,_:
sifig rt':-sgon satellite channels before coi v ggxiprm and affidavit.
(vi) imposing penalties for r 35/ 'z the time gap prescribe 1 (vii) -.l.m'posing conditions on .selling"video/_CD rights not be'foregc_ertainy up period from the theatrical release of the film in the country.
imposing a time limit of 10 years for agreement between producer and distributor.
(ix) Reserving /thedrights for."arbit.ta:tion between. producer and"
-'distributor.
(x) Pressurising the producers/'distributors of film for payment to the member distributor by refusing to register the film.
4.19 Based upon aforesaid, DG has concluded that the conduct and activities of the opposite party are restrictive in nature and are violative of the provisions of the Act.
4.20 DG also examined the conduct of the OP in light of various factors mentioned in section 19(3) of the Act and concluded that the conduct of the OP is in violation of provisions of section 3(3)(b) of the Competition Act 2002, since it restricts the supply of services in the market through collective intent of all members of the association coming together on one platform.
4.21 The DG has also reported that the MPA has also infringed the provision of Section 3(4) of the Act. As per DG, MPA imposes conditions on its members to deal only with its members and with films which are registered with it which is in the nature of exclusive distribution agreement. Further, an exhibitor cannot deal with a distributor if he is not W'"'"'"*\ fiifiear 1;} theplrovisions of MPA relating to compulsory registration of every filth,' non-dealing with non-members or unregistered films results into the exclusive distribution agreement with the distributors and exhibitors which amount to denial 'of mari<et access. in view oi the abovefiacts] according to D6, it established that the OP has contravenedythe provisions of section 3(4) of the Act.
5. Having considered the report of D6, the Commission forwarded it to the parties for filing their replies/objections. The replies/objections received from the parties on various dates are as under:
5. 1 Reply on behalf of Motion Picture Association, Delhi 5.1.1 The Opposite Party in course of proceedings denied all the allegations levelled by the informant and prayed for setting aside the report of D6. The OP submitted that it was registered under Section 25 of the Companies Act and its membership is fully and completely voluntary and no coercion or force is exercised by it. The persons, who become member of the Association, have to abide by the rules and regulations of the Association. it has a large number of memberships and has been in existence since about 50 years. The membership of the association is absolutely and completely voluntary in nature. The association does not compel any one to take its membership.
5.1.2 The OP also submitted that 'g4i:1»c;i:_Ae'?.\7s/e=rae a large number of distributors " A were doing film business in ,De-l.hi,__,LJ_P» a,nd_t;,l't:taragi1¢hai_ ACc0*rding..::(') the OP, on one hand informant wants to avail the benefits of its membership, and on the other hand is complaining against it.
. 4 5.1.3 The OP also submitted that ifneither carries on production, supply, distribution, storage, acquisitionnorwcontrol of goods and s_er_vice__s._k Therefore, no act of it causes or is likely to cause an appreciable adverse effect on competition within India. it is not doing anything on commercial 'basis and is only an arbitral bodyof members who want to avoid long court litigations.
5.1.4 According to the OP, it is concerned with dues recoverable and payable to its distributor members and that money disputes are completely outside the purview of section 3 and 4 of the Act. 5.1.5 The OP also replied that to avoid long drawn out multiple litigation causing loss to all the sectors of film business and to regulate the film business and to safeguard the interest of all the three sectors, i.e. Producers, Distributors and Exhibitors, they had formed their respective trade bodies and jointly framed rules and regulations so that the rights of one sector by the other sector were not encroached. As per one of the regulations of Distributors Association, it was required to get the registration of the film by the Distributors with the trade body functioning in that territory. This was to safeguard against the multiple assignments of distribution rights in a particular tag! 'i ' ?:>,:"*s, _ *.rl"io were booking the films f ,,ftl9t'eir'?- were advancing moneys ;5f'~".{§O 3 /J to the distributors durin th n§akii\t a ffiim. The documents were ot g _. E; ,.{ g kg' .
--c:
w&((') signe'd»by 'producer and distributorsfor,;r.eglsterii,rig:tl')e~films with MPA as.) .. L prepared on 10.6.1994 by Joint Consent of producers association and distributors association.
1 5.1,6.The OP) alleged that the Dbfiyydid l7i0I...fC,O>l.Ti_'S'lClE3.l' and give any finding on the ground raised that UTV' did not have standi to file the information as UTV is its member. The informant also concealed the fact that as member of the association it had also received benefit from the same. For an instance, to recover dues from "Sangeet Cinema", Mathura UP, the informant had lodged complaint with MPA Delhi on 25.4.2011 to recover dues of Rs. 82,918/--.
5.1.9 The OP also alleged that DG did not carry out independent investigation in the case and simply relied upon investigation in other cases. in order to establish contravention in the case, DG should have collected fresh and independent evidence in the instant case which he failed to do so. The only fresh evidence collected by the DG was the statement of Surinder Paul, who happened to. be the representatives of Eros international Media Limited, informant in case no. 52 of 2010. 5.2 Reply on behalf of the office bearers of Motion Picture Association, Delhi 5.2.1 The office bearers of MPA namely Sakshi Mehra (Hony. President), Kirit C.Desai (Hony. Vice President), (30 Mehta (Hony. Vice President), Vinod K Lamba (Hony. Gen. Secretary), Shri SurinderPaul (Hony. Jt.
Secretary ), Shri Rajender Singh (Hony. Jt. Secretary), Vikram Sethi (Hony.
#1.".
We" r~ .
Jt. Secretary) and Sanjay $.04 .
é\','§j submitted that since all decls'on§i Q. """'7l'3n'd "since" the association had a_lre_ady»i'i'l,edlre:p,lvy,they had no't:hing.further to say in the matter.
The informant in course ofipxroceiedings' submitted that MPA was formed as a dispute resolving body among its members. The objective with which the association was formed was to promote and assist the business of production, distribution, exhibitions of films and provide a common forum to its members to meet and address their problems. While the objective of MPA was to protect the interests of its members, it governs and dominates the arena of distribution and exhibition of motion pictures in its territory, as is understood in the Indian Film Industry. 5.3.2 The informant also alleged that the act of MPA, refusing to register new film, instructing the exhibitors to not to release films of so--called defaulting members amounts to abuse of dominance in terms of section 4 of the Act. The lnformant also submitted that the D6 in his report has committed an error by absolving MPA under section 4 of the Act in spite of recording the findings that the association by its action and conduct limits and controls the supply of films in the territory. 5.3.3 In order to buttress its argument that MPA is an enterprise, the informant has submitted that a perusal of the definition of "enterprise" in the Act shows that the motive of any organization i.e. profitable or non- profitable is not the precondition for qualifying. under the definition. if ffincludes an" association of persons, co-.50 1"I(§ etc. The informant has further submitted that after reading the definition of "enterprise" and "Person", together, it is established that a collective body can also qualify as an "enterprise".
. "|"..'1l'*r-'. -1:
5,3,4 The informant also submitted that 'MPA not a charitable. organiiation but a self--reliant organization for safeguarding and protecting the interest of its members, who are producers, distributors and exhibitors. All the members of MPA are profit making entities, which by virtue of forming a cartel dominate and control the business of films distribution and exhibition in the territory.
5.3.5 in its reply, the informant also submitted that the definition of "enterprise" reflects that a person engaged in any activity relating to control of articles of goods or provisions of services of any kind do qualify as "enterprise" in terms of Section 2(h) of the Act. it also submitted that neither the definition of "enterprise" nor the definition of "person", under the Act, pre--empts either of these to be commercial or profit making organizations so as to oversee their activities while investigating violation under Section 4 of the Act.
5.3.6 The informant further submitted that admittedly MPA is an association of persons comprising of producers, distributors and exhibitors located in the Territory, which has about 5000 members. As per charter documents of the MPA, members cannot deal with non--members.
pera'ti've society, local authofi-tyy, 9 '(I no't"to"offer films to certain eyzhibitors. All these action,' instructions issued V ' by MPA demonstrate thatit is in a dominant position and the activities » practiced by them amount to abuse of dominance, being unfair and discriminatory. « A 5.3.7 The lni'or'm::r~.'t also submitted that three other complaints (25/2..01a.'.),~ No. 52/2010 and No. 56/2010) of similar nature had already been filed before the Commission against MPA where instance of similar malpractices of the MPA that had hampered the trade and business for other members in the territory were brought to the notice of the Commission.
Decision of the Commission
6. On a careful consideration of the information, the report of DG, submissions of various parties and other materials available on record, the Commission observes that the following issues arise for determination in the present matter:-
Issue 1:Whether MPA is an 'enterprise' within the meaning of section 2(h) of the Act and if the answer to this is in affirmative, can its acts and conduct be said to be violative of provisions of section 4 of the Act as has been alleged by the informant ?
issue 2: whether the rules and regulations, acts and conduct of MPA are subject matter of examination under section 3 of the Act? competitive?
izoetei-wimatien ' "
F:
Issue 1:Whether MPA is an 'enterprise' within the meaning of section 2(h) of the Act and if the answer to this is in affirmative, can its acts and ranductrbe said ts vieia'tEs?e of pr;-visions sectian 4 ef the Act as h.j:;.= been alleged; by the informarat ? ' 6.1 The Commission notes that the aforesaid issue has been discussed in detail in the order dated 16.02.2012 passed in case no. 25 of 2010 involving MPA and other associations. In the said order, it was observed that as per the provisions of section 2(h) of the Act, to qualify as an enterprise, it is required that any person or department of the Government is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries. 6.2 The Commission after examining the provisions of the Act has concluded while passing order dated 16.02.2012 in case no. 25 of 2010 that MPA or other film associations as named in that case do not qualify to be 'enterprise' since they are not engaged in any activity enumerated in section 2(h) of the Act. The Commission in that case has also held that once an association is not 'enterprise' in terms of section 2(h), its conduct also cannot be examined under section 4 of the Act since it is only the conduct of an 'enterprise' or a group of enterprise as defined in section 5 ,..m...g."s,,,,h.
r of the Act, which is subject X,' wordings of sect;j;g;_n 4 (1) abuse its dominant position'.
6.3 Considering the findings in case no. 25 of 2010, in the instant mater
- 7 'als0.t"m: Cortimésséon h.oia...s that 1.1...ti?£4-...cea:::i;.::.t. be held as,..an 'enterp,r£s,e' within the rneanirxg of section 2(h) and consequently its conduct, rules and- regt-il.ation.s cersnot be a subject matter of examination under section 4._of the Act.
Issue 2: Whether the rules and regulations, acts and conduct of MPA are subject matter of examination under section 3 of the Act? 6.4 The Commission has discussed this aspect also in detail in case no. 25 of 2010. In that order it has inter-alia been concluded that even though the associations themselves are not engaged in any activity which enables them to be termed as an' 'enterprise', the practices carried on, or decisions taken by MPA and other associations, are covered within the scope of section 3(3) since these associations are in fact associations of enterprises (constituent members) who in turn are engaged in production, distribution and exhibition of films. MPA is taking decisions relating to production or distribution or exhibition in the interest of the members who are engaged in similar or identical business of production of films or distribution or exhibition.
6.5 On the lines of order dated 16.02.2012 passed in case no. 25 of 2010, the Commission holds that the rules, regulations and byelaws of EIMPA which are in essence forms of various trade practices carried on by the which states that 'No enterprise or group s;ha_ll and the informarfits were not found to be observed that there was no vertical agreement between associations and the informants in terms of provisions of section 3(4) since the associations art of brodii-ctioi'i 'S'.ji'.'-if'-i . > 1 I r'B!':4i W4. ..t... 'J chain in respect of of any oryseri/ice,' T 63.7 The Commission) accordingly holdsythatiwhile act and conduct, rules, regulations and byeiaws of MPA may be examined under section 3(3) of the Act, there is no case of examination under the provisions of section 3(4), since there is no vertical agreement between MPA and the informant as part of any production or supply chain in respect of production or supply of any goods or service in the instant matter. Issue 3: Whether the rules, regulations and byeiaws of MPA are anti~ competitive?
6.8 The Commission has examined rules framed by MPA while passing orders dated 16.02.2012 in case no. 25 and further in orders dated in case nos. 52 and 56 of 2010. The Commission in these cases inter-alia has observed that rules of MPA and other associations restricting their members not to deal with non--members, making compulsory the registration of each film before release in their territories, restrictions regarding unfair holdback period for exploitation of Satellite, Video, DTH and other rights and act and rules regarding penalizing members who do not follow the dictates of the association are anti--competitive and violative of provisions of section 3(3) (b) of the Act. 6.9 The issues raised by the infonrynia 'v--n~»the instant matter have already /.
/' xi" »\ been dealt in '.:'r.r.=. case nos. 2,5t='--5?§12I° \ i_ 3\'I , ri:?\Qght of the foregoing, the $1') .':ief..Cosmrr;.issiora ~.:tgjiile pafssing ordertin -~-no. 25 -of 2010 had arse Cornmissi.c.>n=v--h.olds that MPA l1;;s...yi.elsa:ted the provisions of Section 3('3}(b)7' ofithe Act' and have caused appreciable adverse effect on competition in India in terms of section 19(3) of the Act.
,r_ L'. .4 __y., \..,,,»_,_;L- . '_,._ ,1'-K ' "R l'h_..=» rl rt . K' . . ,..' "R "h ..z ....\. T! he €...'.J-lllTll'S.';5-C-:§'lVWl'l:!'.: ;.A::S..>!ng orcler.dated,.15.02.2Q12 in case ..,, 25 of 2010 has discussed in length as to how the competition is adversely affected in terms of ;')!iG'-_.'§S.lOl'l$ of section 19(3) of the Act dueto .th_e decisions and practicesof MPA and other associations. The Commission holds that the findings in those cases apply in the instant matter as well.
7. Order under Section 27 of the Act
7.1 The Commission has found rules of MPA as violative of section 3(3)(b) read with section 3(1) of the Act since they limit and control the distribution and exhibition of films in its areas of operation. The rules of the association are anti--competitive and are against the spirit of free competition in the market. However, since penalty has already been imposed on MPA vide order dated 16.02.2012 in case no. 25 of 2010, the Commission deems it fit not to impose further penalty on the association. As regards the conduct of the executive.members of the association, as was held in case no. 25 of 2010, proceedings shall be taken up separately. 7.2 The Commission has also passed 'cease and desist' order in case no. 25 of 2010 , 52 and 56 of 2010 asking MPA to dispense with rules which are anti--competitive. The said order applies in the instant matter as well.
8. The Commission decides 5/ 1%; Com-931'/"..1'\ \ 2:» V) xi \g;'~?' '~=§:;C[2.éf§ z=> ,.
Sd/an Member (AG) Sd/-f Member (T) v'>4,«'- f F51/; ' /I. r Q0 m