Case No. 16 of 2014. Case: Crown Theatre Vs Kerala Film Exhibitors Federation (KFEF). Competition Commision of India
| Case Number | Case No. 16 of 2014 |
| Counsel | For Appellant: Amit Gupta, Sumati Jumrani, Anant A. Pavgi, Advocates and A.R. Vinod and For Respondents: Harshad V. Hameed, Advocate and P.V. Basheer Ahmed |
| Judges | Ashok Chawla, Chairperson, S.L. Bunker, Augustine Peter, M.S. Sahoo, Members and G.P. Mittal, J. (Member) |
| Issue | Competition Act, 2002 - Sections 19(1)(a), 26(3), 27, 3, 3(1), 3(3), 3(3)(b), 4, 48, 48(1) |
| Judgement Date | September 08, 2015 |
| Court | Competition Commision of India |
Order:
Order under Section 27 of the Competition Act 2002
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The present order shall dispose of the information filed by M/s. Crown Theatre (hereinafter, the 'Informant') under section 19(1)(a) of the Competition Act, 2002 (hereinafter, the 'Act') against Kerala Film Exhibitors Federation (hereinafter, the 'Opposite Party'/'OP'), alleging inter alia contravention of the provisions of the Act.
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Facts
2.1 The Informant, a partnership concern, is stated to be a single screen theatre established in the 1930s in Calicut, Kerala. It has been engaged in release/exhibition of English and Hindi movies for the last 80 years. In April 2012, the Informant converted itself from a single screen theatre to a theatre with two screens, equipped with state of the art facilities including seating and projection systems. The Informant claims to have started screening Tamil and Malayalam films in its theatre thereafter.
2.2 OP i.e., Kerala Film Exhibitors Federation ('KFEF') is registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955. It is stated to be an association representing film theatres in Kerala and about 315 film theatres in the State of Kerala are its members. Membership of OP is subject to recommendation from one of its executive committee member and two other members as well as approval by its executive committee and working committee.
2.3 The allegations of the Informant are largely directed towards anti-competitive practices and abuse of dominant position by OP in preventing screening of Malayalam and Tamil films in theatres in Kerala. As per the Informant, OP has been controlling and restricting the exhibition of new movies across Kerala. In September 2012, OP directed its members to strike/stop screening films in their theatres as a mark of protest against an increase in service charge and certain policies of the State Government of Kerala towards film industry. In October 2012, it was decided to indefinitely close down the cinema halls w.e.f 02.11.2012. The Informant apprehended that this move will lead to huge losses as an upcoming English movie 'Skyfall' was due to be released shortly. As per the Informant, while the producers of vernacular movies could postpone the release of their movies till the duration of the strike, in case of English/Hindi movies which are released all over India simultaneously, the strike would cause huge loss to the Informant.
2.4 Due to differences with OP, the Informant resigned from its membership in November 2012. For a few months after resignation of its membership, the Informant continued getting new Tamil and Malayalam films for release and exhibition at its theatre. However, sometime around May 2013, OP started directing the distributors in the State of Kerala to abstain from giving films to the Informant. The Informant has alleged that such conduct of OP amounts to abuse of dominant position as it has denied/restricted the exhibition of films to non-members in the State of Kerala.
2.5 The Commission, after examining the facts and material on record, passed a prima facie order dated 08.05.2014, observing violation of the provisions of section 3(1) read with section 3(3) of the Act in the matter. The Director General (hereinafter, the 'DG') was directed to conduct an investigation into the matter and to submit a detailed investigation report to the Commission.
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DG's Investigation
3.1 In terms of section 26(3) of the Act, the DG submitted the investigation report to the Commission on 25.05.2015. The primary issue that was investigated by the DG was whether there was denial of distribution of Malayalam and Tamil films to the Informant after May 2013 at the behest of or under the pressure of OP in contravention of section 3(1) read with section 3(3)(b) of the Act.
3.2 The DG has largely relied on the submissions and evidence provided by the parties, including third parties, and also the findings of investigation in an earlier similar case (Case No. 45 of 2012) against the same OP to conclude that OP has infracted the provisions of section 3(1) read with section 3(3)(b) of the Act. The subsequent paragraphs highlight the submissions/evidence provided by different parties which were relied upon by the DG.
3.3 Mr. Roopesh G. Makhija, Manager of R.M. Films (a distributor), Calicut (hereinafter, 'Mr. Makhija'), vide an affidavit dated 15.04.2015 before the DG, has submitted that OP has been indulging in the practice of boycotting theatre owners in case they do not agree to its actions/diktats. With regard to the dispute between the Informant and OP, Mr. Makhija has submitted that OP had some issues with the Informant since the Informant's partners disregarded the demands of OP. As a result, distributors were asked not to supply Malayalam and Tamil films to the Informant. Mr. Makhija further stated that, in case a distributor does not agree with the diktats/instructions of OP, that distributor is also boycotted and OP does not allow the said distributor's movies to be screened in Kerala. Therefore, distributors and theatre owners generally succumb to the directives of OP apprehending that such boycott may lead to huge financial loss to them. When provided an opportunity to rebut, Mr. P.V. Basheer Ahmed, President of OP has stated that Mr. Makhija is not in the field of distribution for last 10 years. The same, however, was found to be incorrect by the DG.
3.4 The DG has also relied on the submissions of Mr. Mukesh Mehta of M/s. E4 Entertainment, sub-distributor of 20th Century Fox (producer for the film 'Raja Rani'). Mr. Mukesh Mehta has stated that Mr. Basheer Ahmed had called him to stop screening of the film 'Raja Rani 'and asked him to support only those theatres which were regularly screening Tamil and Malayalam films. He further stated that there is an understanding between the distributors, producers and OP that the distributors would release films only in agreed theatres which the distributors normally consent to. It is also submitted that Mr. Basheer Ahmed is following/enforcing this agreement and as a distributor, M/s. E4 Entertainment can release movies only in mutually agreed centres. The DG provided an opportunity to Mr. Basheer Ahmed to contest the submissions made by Mr. Mukesh Mehta. He accepted the fact of premature withdrawal of the movie 'Raja Rani ' from the...
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