Competition Commission of India
Ref: Case No. 25/2010, 41/2010, ... vs . Chess Feidei*Ai;Ien, Wrii: Petition ... on 16 February, 2012
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Sage ms. 25 of 291%} Reiianca Big iEnteri:ainmer'it Limited i : Znfiyrmaiit Against i<I.am:~:itai~:a Fiim Chamber Commerce ~ Opposite Party ~--~ 1 iEa:~:.;t+:-rm India 'Motion Picture Assaciation --- Opposite Party ~-- 2 Cenicrai Cimuit Cine Associatian, Amravati -- Cipposite Party ~~ CEi"i'iIi'E1§ Circuit Cine Assaciatioin, Baipur ~ Opposite Party - 4 Centrai Circuit Cine Association, Imziore ~ U;3§)OSitE Party --~ 5 Hyderabad State Film Chamber 0? Commerce i ~ Dpposiize Party --- E» igiortiiernv India i'v'icii:i=::;:*i Pictures Assciciation -- Opposite Party - 7 Motion Pictures Association ' -- Opposite Party - 8 Inéian Moiiion Pir.:i:ux'es: i;)istr'i'mii:oi":~ Asssociatiean -- Oppiosiie Pai"£'y' --- E3 iiizihai' arid Jharirzhand Mciizicm Picitures Associatiean ~ Ciitipiisite Par'i:y ~ 18 "i'i'z€ Ci'i<':'3i'ii'iE:3i iiaixchipmam i:i'i§i"u\raiiu:r District -- Oppessite ?J'ar'i:~,! ~ 11 Fiim ii)-issi:i'ii3Liti;'ir's Association Cirissa Fiims U§F3i§i"i_blfiZ{3i"S Syndi<:ate - Ogapasite Pari:y -~'ii_2 ii':;s.:=;:s;s.-°s fie}. <22?' ZQRG U"i"x/ Soi'=:i-ware fjomwsunicationss 'Liimii.-:~:>:*i 1m"'c>:*:'nai'ii:
»';'a51e Na. 45 Q'? 2533.6 Refiancze Media Works Limited 1m'o;-mam;
Againsst Kamaizaka Fiim Chamber of Commerce ~ Qpposite Party Case Na. 4? Q'? Zfiifl Refiiance Big Entertainment Limrteci Informant Against Kamataka Fitm Chamber csf Commerce ~ Opposite Party Case Na. 48 cf 231% FICCI Mu¥tip¥e>< Assaciation cf Inciia Imfiarmantz Against Kamataka Fiiim Chamber of Commerce ~ Opposite Party Qgaga Na. 5% 3'? 3.513 Erofilnternaticmai Media Limited Enfcrrmant Against Bihar and Jharkhanej Nation Pictures Asgociation » Dppssite Party Ceme Nfln E7533 and 5% ea? zama UTV Software CGmmLzm::ati«:ms Limitfld Infatmnamt Cipposite Party R, Praised {dissenting} I have seen the majority order anti 1 have a different View and em therefere pesssirigs a separate orcier.
2, But before deaiihg with the issue it is necessary to discuss the facts in respect of the hire industry. When a him is announced having a perticuier story ends a star cast, the producer requires funds to produce the movie. In the eariier years, as him making, was perceived as a risky business, bank and institutiehai finance were not aveiiahie to the fiim protiucers. Finance was provided by private finehciiers at exorbitant rates at interest and was eiso provided by the distributors of the hims; The ciistrihutors iri turn used to get finance froth the exhibitors who were the owners of sirigie screen theatres in ciitfereht regions of the country. By providing the finance the distributors acquired rights to exploit the tiim rsormaiiy for a peried of horrhaiiy ten years in the areas where the distributors operated. The country was divided in various zones, ihitiaiiy five, then seven and how tweive ztmes. A distributor operated in one zone and the tiistritiutors dist:rihuted the fiims to the exhibiters in its zone, The agreements entered into by the producers and the distributors were on outright sate or rhiriimum guerarztee basis, in the rhihimum guarantee system, the distributors agreed to provide a roinimum guarantee to the eroourcers and if there was an overflow the overflow was to he ehereti by the producers, the distributors ano the exhibitors in different propor'tiohs. Some irnes, the prrntiucer or the distributors used to the hire the cinema haiis of the exhibitors for a certain perio-ti at a negotiated price anti the pi'Odut".er ,/ the dietrihuter used to negotiate the hiring charges. Thus the distributor and the t'?){i"iiiL3ii"_<3i' used to provide ierge churme at finance fer rh.ei<ihg the movies' i 3'! in order to have discipiirr industry, the irrciustry organizeci itseif at ciiffereht ieveiis K'.
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be rergietereci with one of these name of the him was to t same name were not reieased at the s-erhje '~.,\ 1»-: -3
'W0 iiiifte we me. Secohoiy whenever a orociucer entered into an agreement with a distributor for a certain zone, this was aiso registered by an agency. Pohiicity of this fact was given through various otitiiioatiohs so-rgh as Trade Guide etc. This was done with the idea that a producer does not seii the same movie to another' is mariner oiptain further finance.
Sornetimes when the fijim being produced distributor in the same area and in th ihvoived ierge amount of finance arid the distributor could not finance the oroduotion another distribi.itor was appointed for the zone or two distributor's wouio form a joint venture to finance the fiim. In every zone where the distributor operated, the exhibitors and the tiistrihutors formed associations to regtiiete the entire business oi' fiim exhibition and distribution. The associations were either societies or companies under Section 25 oi' the Companies Act. These associations or companies tormuiateci b'y'€"~ia\/VS and they worked as dispute resoiution agencies for disputes between the exhibitors, between the orotiutzers and the oistributorsjexhibitors and between the distributors and the exhihitorsi. "These associations reguiateti the business in the way that once a producer / oistriootor had agreed to give the business oi' exhibition to an exhibitor, the producer/disti'ihotor couid riot then give the rigirts to another exhibitor. In this mariner, the pecuniary interests of the exhibitors were tproteeteo. Sirniiariy, when there were simiiar disputes between the i3i'O(iLiCE3i"S and the tiistributors/eszhibitoirs, these associations protected the interest oi' their members. At! the prodoiters /tiistritititors had to beoorne rriemhers not the association by paying a riorriinai fee before a tiirn could he reieaseti in that :2:orie ,i' area. They also had to register the tiims with the zoiiai associations so that the names of the orociocer _/ distrihutor/ e><hii:iitors were known. These associations hiat.i...no statutory backirig but were created for the reguiation of ther' Sr-i:*:i:1~\s.i;»\r~,i and they had evoived :<:ier;to'~3oe ertective has to have over a period of time. Any i"egi§ia r i _ __:; ~... 3 M oenai powers. As no statutory 3}.3i'iZi§i\Oi'i avaiiahie to the associations, \\ \\.\\ V . _ ",5 ,3 ' -
they e><er«:iseo the power of i'.)\"§§'*."'i'i Th Li§S¥L1i.i ........ 77 rrrr w» ie was nothing out the faiiiire to honour contractual obiigations. Fsiiure to pay the penaity resulted in boycott by the associations and their members.
4. This system was working well tlii the advent of new tecnnoiogy the migration of the Indian community to different countries. As a restiit, title demand for Indian films extended in various coontriels. Titeretore the ;:srodui:ers started seliing the world rights of films and in this manner got a new source of revenue. With the swivel of communicaizion 'by sateliites, it was possibie to send fiims through the medium of saiteliites. Thus DTH and satellite communication also become aveiiable to the producers. With the advent of internet and broadband technoiogy it became possible to transfer fiims through internet and broadband services. With the imowiiow increasing in the duplicating technoiogy it become easier to dojoiicate a fiim and seli them through floppies and compact discs. Ali this expanded the earnings of the producers. World rights, seteilite rights, DTH rights and music: rights cooid tzesoid and the producers couid get large sums of money. But it aiso led to a situation where the shelf iife of E: film was reduced to a few months. The new tecimoiogy also ied to an increase in piracy and reduction in the eemings of the producers. This aiso led to a situation wtiere the period for the expioitation of films got r'edticed as far' as the exhibitors were concerned. Tlniis reduced the earning of the exhibitors. Another factor vliiiioii some up was the errivai of moiizipiexes where mdliziple screens were used for screening films in a more congenial atmosphere. Being new in the area, i'ntiiti;3ie>:es got saies tax exemption in some states. Ttiese factors and the rising property prices aii over India ied to closure of many singie screen exiwibilitors ali over India. This led to Vai"i{)LlS disputes within the industry and are the subject matter of discussion in these cases.
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The issue to be decided is i ' Competition Act wouid he appiicabie to the facts of this case where a number of associaticms are im:o3ve=.:L But before taking the anaiysis fLii'U'":€-3:', it is necessary tr; discuss the iegai issues in this case. Enterprise has been defined in the Ciampetitian Act under §ect§m°i 3 {it} as i.1§"iCiB!'i~ "enfer;::>rise"' meems 5 person or a ciepartment of the Gove"rnment, who or which is, or has been, engaged in any activity, reiating to the production, storage, siippiy, distribuirim, acquisiticm or control or articleiss or goods, or the prcwision crf services, of any kind, or in investment, 01" in the busiiiess of acquiring, fielding, uricierwriting or deaiirig with si7a>res, debentures or Qtiier sei:ur'ities of any other body corporate, either ciireczfiy or iE'im::ugi3 one or mere 0:' its units; or ciivisionis or subsidiaries, wiiezfiier such unit or divisiatm or at a ciiffereni: place or at dififiarent places, but does not inciude any activity of the Governrrient reiafabie to the siovereign functions' of the Goverrirzvent including aii activities carried on by five c:Iepar'tmernE's of me Centrai Governmeni dealing with atomic energy, Currency, defence and space.
The imp' "tam: words in this Sectérm are person amt; activity. Persan has been dfsfined in Sactian Mi} as Lmder:-
JU5 .
person im2i'ua'es:-- ii} im'iivic3'ua!,' (':'.i} 52 Hindu unciix,«id:=2£i i;amiiy,' .f'fii} 3 company,' {iv} a firm; (V) an associaiion of persons or a bociy of iridividuais, wheihei' inca;;:»oi'aied or naz', in indiza car Gutside inciia,' {wfi ;-my cofiaoreaiion esiaiyiished by or tinder" any Cenfrai. Siaie or Prc2vim::iaiAc1° or a {3OV81"f?i?}£§*i?f company as cieiineci in Section 61:' 7 of the Ctomoanies Aci, i§:75; (vii) anybody «:o:;<30raz'£-2 irvcczrporaied by 0:' wafer' five ,-'.-:m»'.:; of 551 c»minii3»"0a:iside imam; {viii} a conogaerarive sociesiy registered undue!' any iaw reieziing ic: coo;3er'aiiv'e socie1'ies_.' ('ixi 52 local auiiioriiy,' {A1} gs' _'§2.t;s,_(\\§gfi'ificial _iuridiczai pei's<;m, moi faiiing witiain any mi rive preceding sub 'f "
'\ 6 net. But if the society is registered under the Cooperative Scscieizy Acct has to be treated siecxarateiy. "Activity" has been defined in the exeieriesien
(e) sci fiection 201) of the Act as foiicwsr Expianaeon ~ Fer the ;:iu.r'i:20.ses of this c:/suse, i-
{a) "activity" includes ;:7r'0i"es5iGri or eccupetien;
The definition is inciusive and has therefere has to be given a very wide meaning. The woms used in Section 2(5)' of the Act is "any activity"
reiating to carrying one of the activities cu" business. it rises not mean tiiai; the enterprise er the person shouid carry on any busiriess. "Any activity"
is qusiifiecimr :r'eiai:ing to the carrying out of business. Therefore, a policy guideiine, a reguilation, as iegei acizivity or any sci; which effects the carrying on of business is covered. It is evident frcim the faci: that a government departmeni: is an enterprise according to the definition buicfe government department: does mi: carry cm any business. Therefsre it is not necessary that a person siiouid be carrying eui: any business izo T qiiaiify as an enterprise 1.:-rides' tiie Competiticin Act' This View is aisc:
c0nfirmei:i by a decisieri ef the Deiiii iiigii Cami: in the case sf i~iemai':t Shiarma vs. Chess Feidei*ai;ien, Wrii: Petition (cm) No. .'57'.7'O of 2.811. This decision of the singie Member' was cizmfirmeci by the Division Bench by its Carder LPA No, 9?2 of 2011 «it. 22.1.i_,2{}11 'i'i'ierei"o.re the aS'SDC§§§:§Qfl§ covered under the defini'i:ic3n of enterprise under the Competition Act.
6. The next issue is whether the associations are iii': by the provisions ei" Section 3 tn" the Ciompetiticn A:::i:, Siecizion 3 is Lii"i<Zif3i' Chagtzter 11 ef the Act which deais wiizh Proi1ii3ii:iic»n of certain sgreemenics, abuse of dominant;
position and reguiation cf COi'i'ii.'}ii"iE?:tiOi"' ' ~i-his chapter there is e ' _:§:if2\iii\ 3 is anticompeizime egreemeriizs. Unrjer Section 3(1) off': er§:{:ei§:)rise / persiim er en asscrcietion emerp'i*ise ,2' person s'ii§ii t H ...................................................................... ..\-- "
is iiireiy tr: cause or causesi eeereciabie aciverse effect on competition inside India. Section 3(2) envisages that such agreements are void. Sectirm 3(3) is e deeming previsier: and it envisages a reibuttabie presurnptien.
7. Under Secticin 3(3) of the Act, three situatiens are covered. The first is any agreement between enter'prises,lass0cieti0ri of enterprises er person/ersseciation er persens. The seconrzi is grireiztice carried out and the third is "i:iei::isien tei<se:n"'. Thus, by the deeming prmrieien, agreement, ;:irar:ti=::es carried Gut and decisions taken are pieced on par with agreements and ail these three items have to be treated as anticornpetitive agreements. Practice carried an and decisien taken has re be by an asseciatien of enterprises er by an eseciciation of persriris. For eii the three situations, cane Cenditieri is that the €:i}tE~3'.!"§}i'§SEES/3;;-€i'E3iZ}f'ii and their esseciatiizsns simuid be engaged in icienticai z::»r sirniiar trade of geeds or services. - The §3Ei"SDi'15," enterprises and their associatiens weuidbe mi:
'by the provisions if they in
(e) i:.v'i'i'"ec:ai*.»'}./ or indirer:t'fy rjerermines purchase or safe prices_;
(13) iimirs or contreis prciducrtfon, supply, merireirs, tecririiiral developrrierit, in vestmenr er previsfczan er" services;
':3 si"iare:s the rnarket or s»:3urc:e of reduction er pmvisiori of i seirvirres b I war of eilcicetion of ecu i"€;i;')f'iiC£3! area of marker or . I type of goods er serv.ir:es, Bi" nurnber of cusrsrriers in the inerket or any rather similar way;
(if) ci'.i'rer:riy' or indizrectly resuits in bid rigging or rrofiusive bidding.
it is presumed that if these 'facts exist they we-uid be presumed to «zrause This means that if the fiie iegai provision, tiieri the V are not rfequirejd te be "" " t then the Commission wouhzi have to exanwine whether the feature mennonede in Section 19(3) would appiy to the facts of the case.
8. Before proceeding with this case, it is necessary to examine as $0 new agreement and practice have been defined in the Act. Agreement nag been defined in Sectien Em} as under» "agreement" incfudee any arrangement or undermending or ectian in ::encert*~« {i} Whether er not, such arrangement, umjersfen«::fing er actien is former' or in wrfiirvg or,
(ii) Whether or 'not, such errangenvenz; understanciing _or action is intended be be enforceabfe by legal proceedings.
It is atee an inctusive definitien and therefore a wide interpretatien has to be given to the pmvésions. The definitien encempasses an arrangement or an underetanding or action in concert. Thus the static and ciynamiz:
e§ements of agreement are into account. But an agreement eiways envisages rnere than one persnn or an enterprise.
As far pracztice E5 concenrned it is eciefined as sOe§EG\NSZ-
"Pi'E:C§iC€" has been defined in Seefien 25:2?) of the Act and includes any practice reiating to the carnring an of any trade by a person or an enter'pn*'5e.
It is again an inciusive definitéen and has to be given a wkie intermetatienn - and the pra<::t:ice has to be reiated tn - ' iity reiating in carrying on of a trade by a person or an enterprisg ' \ S ';:'~ \ - »: _.
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\\ x A gaerueani <31' the e::s-cave discégssfi-0 be is whethef there w étion of exhibitors and distritautors or the entities have to be treated as a separate on body because there had at iegei existence. Many of these associations were incorporated as 25 companies or were registered as cooperative societies with the reievant. State Acts. But in fact these entities-woi*'teo as associations of various exhitnitzors and distributors weii as producers. The agreemerit it any was entered into taetwez-en the exhibitors oi" the oistributms at the time of the forming of the association which in many cases was more than 70 years ago. it some a situation is accepted ttieii any share purchase of a limited company for e oerticuier purpose would amount to an agreement for the purposes of this Act. Simiieriy by becoming a member of society the agreement entered into SC} -- '20 years ago for becoming a member wooio have to be treated as an agreement within this Act A decision taken or practices carried on by these associations of enterprises or persons according to the majority view wouici be hit by the provisions of section 3(3) of the Act. to my View once a person or an enterprise soiastribe to the shai'es of a company or become a member of a society then the ieritity which is found is a' tcompaoy or a society and this wooiti be a Ciii:f€i"ei'ii: body from an association of persons or eiiteroirises. in such a case it wouid be intzotreet to hoio that the incorooreteti company or the society is an association of eoterpr'ises. In this oerticoiar case there was no agireemeiit and as I have eiready heid that the association which formed was as different iegai entity from the association oi' persons and as there was no agreement, Section 3:13) of the Act was not atttacteti. There is no doubt that iarge numbers of persons were involved in the association but as the constituted societies and the incoroozteted companies were iegai entities the different entities cooiti not be treated as association of persons. As one entity cannot enter into an agreement with seit, there was no agreement. As far as precti» necessary that the oracti :is'*ii:ii'i taken. shouio be by an 'S'
ii) of section 3 weuid net be eppiieatiie to the facts of the cage. 1 therefore tie net agree with the majority View that an associetien was in existence.
3.1. The b€?ia\/iOUi' at the said asseeiaitiens have to be examirzed with reference U2} Section 4 of the Competitien Act. I have eireedy heici as discussed above that it is not rieeesssary for an enterprise te carry an business and therefore the relevant society or cempeny couici be an enterprise which couici be cevered Lmcier Sectitiri 4 of the Act. tinder Sectien 4 of the Act in the expianatien of the said section dominant position has been defined as under
Ex;::u'anation:-- For the purposes of this section, the expressioii ~--
(a) "deminent position" means at positien of strength, er2joy'ed by an enterprise, in the rei'evant market, in India, which enables it to - ifi) Gper'aite fndependentiy of cempetftfve forces prevaiiing in the refevent mamet; or A
(ii) Affect its competiters or consumers or the refevent znarket in its favour.
In the area which has been accepted by the assecietitm as its area <3? operation, mast of the exhibiters and distributors eperating in the area are memiziers cit' the society er the ceriiperigr as the case may' The €FiiiZt'3i'{I)i*§E$EE which is eoeiety er a company is abie to eperate imtietendefitiy VL-fl ef the «::0m;3etitive fatces preveii'-mg in the i'E3§<';Z"""'i"; :'.;et.i Tttus, in the of its epei'ati<:m, the said associations are dominant. Thei facizers meriticmed in Sectien 19:9?) else need to be ieeiaed irate as to whether the enterprises are deminant with reference tze tin. 'Factors. These f3i':iei'§Z3-HSES being cempanies and seeieties eating maini'y with reguiaticm do moi: have a me:"i<ei: stiere, size, ressoutces e "econemiz: ;:u::iwei*., "i"hei'e is no \\\ if Ksgeiiiiwg iauying pcswer, ea-eiai question of verticai integraitiew er etiiigatiens and eeciei cost ;tre§t§§re and the size of me'i<et 11 difterenee. Bot ever: then they are in position tocreate aeereciaoie adverse effect of competition, The consumers in this caseere dependent on the enterprises by the virtue of the fact that the tiitrererii: enterprises operating in this business in the area accept trie oiktei: oi' iztze societies arid the companies and therefore the CDi"iSi..ii'i'i€Ei'S are totaiiy dependent on these societies and companies, Further the esisoeiation ie. the societies and the companies have acquired domirfarit position ae defined in Section :tQ(ri)(g?) of the Act under the eiatise 'otherwise'. These enterprises have acquired this positieri of t:it:»mir:ence because the other enterprises who are memioers of the enterprise X association of society have given this power to the enterprise; No other association can be formed fer the benefit of the different e:><iiibitors and distributors because the oistiritmtors and exhibitors wouiti not agree to form to other essocietirm. Therefore there is an entry barrier as far as the creation of another association is; izoricerneti. The provisions of Section 19(4){h) are aieo attracted. Therefore the enterprises have to be treated as ciominerit gniayers in their fieie of operation.
12. The next issue to be defined is the reievent meri<et with rei'ererz«::e to the reieverit tiroduct market or the reievarit geogreptiicei mari<et or with reiierence to both the meri<ets. Ir: this case the reieverit protiuczt rrieritet wotiid be the exhibition or distribution of fiims in the geogrepiiicei area in which those associations operated and the reievent meri<et wouie be the service of tiistrityotion or e>~:i1ibitors of fiimsz. The geogratihicei rriaritei; wouio be the area for wtiicii the societies or the izorrsoeriies were created, 13, it is now rzeceesery to cerieider the abuse of tiomirierii: by titeee enterprises in the area of their oo The section under which the aesot:ietitm.s have iriduiged iri " orriinerrt position is Section \ \ , 5"+(2}(<:} of the Act, By iZJCi\,/CC>'i;::{iii,;' re tor ditfererst reasons ttiey tttttttttttttttttttttttttttttttttttttttttt ttietiiieiiidiiieed iii iii
- the prociutzere. Ti'iiE3\_,«' tieve 1 2 eiso hit by the provisions of Section 4(:}:){b{i) of the Act as the provision tat sservices is restricted.
With this View we have to exernirie the beheviotir of idifferent associations. For exampie iéarheteke Fiirn Chamber of Comrneree did not eiiew to release tiims in more than 14 screens in the entire states. This was done only in the case of nori Kermaiziige tiimss. The restriction was imposed in order to promote the fiims made iri the ierigtiage of the state of Kernataka. Thus the association of KFCC has not oniy errforced unfair and discrirriiriatory conditions in the provision of service taut aiso has iimited and restricteci the provision of services in the market. Thus the provisions oi' Sections 4(2)(a'}(i) and L'i{2.)(h){ii are attracted . There is no doubt that this was i-me to promote Kannaciiga Fiirris hot this cannot be done at the cost of denial of market access to other piayers in the market. The oniy way to oromote Karnataka fitms is to produce quaiity fiirris so that they areebie to compete with the i-ioiiyweeo and Boiiiywooiti fiirhs. There carioot_ be a c:iist;rirh.irietiori or: the basis of Eanguage, cast, ate)»: and creed. This is a coristitutiortai gtxarentee and it is erishriried in the Competition Act. Theretere the boycott of the tiime and §i¥'E'ii'?;ii"1§i them omit! to tetirteeri screens amounts the ciehiei of meritet access besides being {Z§iE.«Ci'ii'i'iii"iE,':'§fI)i"§:'. KFCC has therefore itohtrawened the i3i'£3\«'iSiCii'}S of Section «<i{2)(e){i) and Section ri{2'i(i3)(i') of the Act.
15. The next issue is in respect of sateiiite rights, DTH rights and video rights. As aiready discuseeti above, the sheii' iife of e ir;<:ivie is quite low. Though some rnrodocers anti «:iistritiutors agree to the reieaee oi' these rights within a peried of three months of the release of the tiirhs, the tiifiererit assotzietiijrts have different perioois some of the associations agree to the reiease of these rights within six months of the reieese oi' the fiirris but some others ins' "'33'~eeriod of five 'years. Though some of the distributors agree t :.\--ttiese'irights within three months at the teieese of the fiirmfi, r hQt":te.ii;e into accou ht the iiitzereet er" the I git \. V. ' .
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{)4 movies come to the theatres after a period of three to four months or ever: iater. if the seteiiite, DTH rights and video rights are sold prior to the exhibition in the cinema hails, the exhibitors are out to loss as the majority of the persons wooid have seer: the movies on 'mi'. either throuigh sateiiite broacicasts or cebie TN. The imitistry shouici decide this issue amicahiy keeping into mind the interest of the orocziucer distributors and the exhibitors.
s, the
15. But presehtiy the saie of sateiiite, DTH and video rights have i-ed to ciifficuities for the prodticers, the distributors and the exhibitors. Presehtiy most of the associations irisist that before the release of a fiim, a producer should become a member of their associations and that they shouid register their_ 'fiirris with the association. Registration and membership creates no tiitficuity as the fees charged is very nomiriai. There is a clause in most of the associations that no member shooiti heel with a non member. if a member cieeis with 5: nor: member he is heaviiy L oenaiiseo. Thus a producer has to become a rrierrioer of the association or otherwise it wouid not he abie to reiease its tiim in the area of the association. But when a producer becomes a member of the association he is made to sign an uricierteking that it wouid hot reieese the seteiiite, video rights etc. for a period of five years from the date of reiease of the iiiim. The producers sigh such oriciertei<ihgs for the simoie reason that their fiim wooid not he reieeseci if they tio not sign such undertakings. Bot thereafter the producers seii the seteiiite, video rights etc. rrioch before the expiry! of the oeriioti of five years sometimes within a period of three rnonths or even eeriier. in such cases, the assotietiohs ievy a charge on the producer' for the teiiore to honour the eohizract entered into with. the association. But when th-e""i"
"'<:i~ tiger does riot pay the iiooitiateti tiemages for the vioiation of t comes with the distribution sti aiiow the reieese of the fiim \ \.
i;
amounts to e tieniei of market access in vloiation of Section sfi(.?_){c) of the Act.
17. The denial arises mainiy due to the coilective bargaining strength of the exhibitors / the distributors who act through the association. if there is a contrectuei iiability on account of liquidated damages, then the «:o,rret:t course for the association is to go to the courts for recovery but they cannot deny market access to the producers. Another issue which appears is that though there are hundreds of producers, comoiaints have come only from s henclfoi of producers. There producers Clo not itieiieve in foilowing the earlier norms and wooid like to increase their profits at the cost of the exhibitors.
18. In any case it is a contentious issue and the trade has to sort it "out. In any case taking into account the smell sheif life of films, a period of six months from the reieese date would be .a reasoriabie period for the sake of seteilite, video rights etc. A period of five years is totally Lmreesonebie. A period of six months wouid take care oi' the interest of the Di'Odl.1C€l'S and the exhibitors. But in any case, boycott. of e fiim is enticomoetzitive act untier the provisions of Section 4{2}(c') of the Ar.:t.
19. Simiierly when some disputes arose between producers and the exhibitors and some amounts were due irorri the producers the association stepped in to support the exhibitor and as usoai boycotted a subsequent iliirn of the orooucer ox; not eliowing its registration and release. In such cases also, the exhibitor could have filed a civil suit for recovery end the association E~3i"}iIJL.ilCl not have boycotted the film. This eiso a violation of Section <i~{2)(c) of the Act.
20. The D.G. also found during investigation that some associations have clauses which restrict de ' 7' true of ir-LFCC, cccs. B3i\'li'-Vt, rtgstarid MFA. This restricts arid iimits' the provision of ser§;\g.\i§eis' 3 rriembers in View or Section deaiirigs. Such restrictive and enticornpetitive hehayirzstir sshouiti be stopped by the associations by emericiing their iaws.
2t. Another' issue reieed by the DE. corrigzuisory registretieri at the fiims. In my view, registration cif fiims is necessary to bring some definitive in cieaiings and trenegziarency. But if any irither cericiitiens are out whiizh has he reiaitiohshm with the contract er registratien is vioiietive of Section 4(2)(d) en' the Act. Such seppiemehtary ebiigations at the time ei°regisi:retien ehouici be stopperivby the associations.
22. The essecietiens have done exceptionai work during the years by setting disputes and running the industry iii a geed_ rnanher. But over time certain ehticemgaetitiye behaviour is bound to arise. The asseciations are timing the werk at reguietioh wit.hoi.it a stettitory autherity and therefore the eniy euthcrity which the association. is that :3? boycott and cieniai at market access. But then boycott iaiis fem oi' the Competition Act as ciisctiseed above.
23. it have net ciiscusaed the facts of the case heceeee they are ciiecussed in the rnejmity oririer.
24. Considering the abuse of dominance by the association, which are either cei'ric»anies er Societies, in my view the distortion createri out in the market is net iarge as far as comizietitioh is concerned. Thereqtore periaity at the rate of 2% of the turriciyer of each association as diecusssed in the niajority order wouici he eufficient fer the contravention weeici be sufficient. The essocietione shouici comeiy with the ciirectione issued in the ercier within three mcnth:-2 of the Cartier.
25. The Secretary is Q" ~t<:1\yto communicme the ortier to the concerned eartie .-'.3 S. V' \ "i iv.' " ' 't x.-1
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