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i. Virtual Print Fee ("VPF") VPF is a fee paid by a film producer/ distributor to the film exhibitor (including single screen theatres and multiplexes) to recoup part of purchase price of digital cinema projection equipment by exhibitors, for use in the presentation/ screening of the film. The fee is paid by producers/ distributors, prior to screening of a movie in a theatre. The Informant has alleged that the VPF model was agreed upon by the producers/ distributors with a sunset period, in a move to reduce the cost of physical prints incurred by the producer/distributors, curb piracy, increase durability of the content, and improve quality of cinema viewing experience. Although, the agreed period is long over, the multiplexes have continued to charge the VPF even after the sunset period. The VPF charges should never have been imposed by OP-1, OP-2, OP-3 and OP-4 in the first place, since, there was hardly any replacement cost for old equipments. VPF that was recovered from producers/ distributors was supposed to only cover the cost incurred by the multiplexes on equipment and such collection of fee ought to have ceased after some time. Further, details regarding investments made for equipment or accounts related to total collection of VPF were never shared by any multiplex with the producers.
The Informant has averred that the Indian film producers/ distributors are losing out due to this scenario as VPF is not charged in India, presently from Hollywood studios as they have an alleged worldwide agreement not to pay such charges and multiplexes in India have colluded with globally present multiplexes chain. It has been further alleged that when a Hindi/ Indian film is released on the same weekend as a Hollywood/ International film, the Hollywood/ International studios incur zero cost per print as compared to Hindi/ Indian film studios, which are paying Rs. 20,000/- per print per multiplex/theatre as VPF to the exhibitors. This allows the Hollywood/ International studios to release more prints of their films in more cinema theatres, in comparison to the Indian production houses. The same has been illustrated by the Informant by citing example of the popular Hindi film Dangal produced by Disney. The said movie was not charged any VPF owing to an arrangement of Disney regarding exhibition of their international/ Hollywood films in India. Further, due to dubbing of the films, Hollywood/ International production houses are capturing Hindi belt and the regional market owing to zero VPF charges paid by them. In the absence of VPF, these films can be screened in maximum theatres as opposed to Bollywood content. The Informant has alleged that OP-1, OP-2, OP-3 and OP-4 do not negotiate on the VPF individually, but collude in charging the same, owing to an anti-competitive arrangement amongst them.
12. While dealing with the specific allegations, the counsel for OP-1 submitted the following:
i. Virtual Payment Fee The genesis of VPF can be traced to the migration from physical prints to digital cinema by both the content producers as well as the cinema exhibitors. Digital equipment aggregators such as UFO Movies and Scrabble entered into agreements with Six Hollywood producers (i.e. Paramount Pictures, Sony Pictures Entertainment, 20th Century Fox, Universal Studios, The Walt Disney Company and Warner Brothers) in 2008, undertaking to lease Digital Cinema Initiative ("DCI") compliant Digital Projection Systems ("DPS") to exhibitors in India and to collect a payment for the same, i.e., VPF of Rs. 20,000/- per print per multiplex/theatre. OP-1 had no involvement in the fixation of this rate and there was no agreement between exhibitors and the content producers. As Indian exhibitors, who for most part screen Indian content, began migrating to digital cinema requiring huge amounts of investments, the prevailing VPF rate (as agreed between the said Six Hollywood producers and third party equipment aggregators) also became the guiding benchmark for Indian content producers who began paying VPF to Indian exhibitors on a per movie per theatre (not per screen) basis. There was no oral or written agreement pursuant to which the Indian producers began paying VPF to the exhibitors. The agreement and the sunset clause alluded by the Informant refers to the agreement between the Six Hollywood producers and the third-party aggregators. In 2018, the agreement between the Six Hollywood producers and the third- party digital aggregators lapsed. In 2017, OP-1 initiated the process of formalizing the industry practice of VPF payment into formal individual agreements with both Indian and non- Indian content producers. OP-1 is in discussion with many of these producers for signing separate VPF agreements and 'Yash Raj Films' has already signed an agreement with OP-1 for payment of VPF until December 2024. 'Viacom' (a Hollywood content producer) and OP-1, also, are in the final stages of concluding a written agreement. It is imperative to note that the benefits of digitization though accruing to both the content producer and exhibitor, is heavily tilted in favour of the content producer. While OP-1 had to install equipment costing Rs. 25,00,000/- to Rs. 2,00,00,000/- with an annual maintenance cost of Rs. 2,00,000/- to Rs. 3,00,000/- per projector, the content producer has seen a drastic drop in print cost from Rs. 60,000/- to Rs. 70,000/- per print to approximately Rs. 20,000/-. In addition to the drastic reduction in operational costs, the content producer also benefited from the fact that digital cinema is less prone to piracy. Another benefit of digitization was that it allowed the content producers access to far wider distribution than was possible with physical prints, while the exhibitor ended up incurring higher costs. In light of the above facts, if the Informant has taken a stand not to pay VPF going forward to film exhibitors which is a legitimate source to cover the huge costs being incurred by the film exhibitors, it is a matter to be negotiated and discussed between the parties and the Commission is not the forum for such negotiation.

15. While denying the allegations of the Informant, the counsel for OP-2 submitted that VPF, negotiation of revenue sharing arrangements etc. are matters that are purely commercial in nature and Informant has never approached OP-2 for either discussing or negotiating commercial terms pertaining to these issues even when OP-2 made it clear that it would be more than willing to engage in such discussions.

16. The counsel for OP-2 further submitted that the Informant's frivolous allegations that the VPF charge restricts movie production and exhibition of low-budget films is patently false and fictitious. Digital cinema has undoubtedly resulted in a significant increase in the number of films that are made each year from 1274 in 2010 to 1813 in 2017. It was further submitted that the Informant omitted to disclose details such as, other than six Hollywood Producers, all other Hollywood International producers are required to pay VPF to OP-2 for all types of content produced by them, i.e. English, Hindi and other vernacular content. In fact, even the six Hollywood Producers presently pay VPF for Hindi and vernacular content produced by them. The counsel for OP-2 substantiated the same by submitting that Disney, a Hollywood production house, did pay VPF for its Hindi movie, 'Dangal' when it was screened across multiplexes, contrary to the claims made by the Informant.