Case No. 40 of 2011. Case: HT Media Limited Vs Super Cassettes Industries Limited. Competition Commision of India
| Case Number | Case No. 40 of 2011 |
| Counsel | For Appellant: Pallavi S. Shroff and Naval Chopra, Advocates and For Respondents: Amit Sibal and Anand S. Pathak, Advocates |
| Judges | Ashok Chawla, Chairperson, M.L. Tayal, and S.L. Bunker, Members |
| Issue | Competition Act, 2002 - Sections 18, 19(1) (a), 19(4), 19(6), 19(7), 2, 2(r), 2(s), 2(t), 27, 27(b), 3, 3(4), 3(5), 4, 4(2) (a), 4(2)(a), 4(2)(a)(i), 4(2)(a)(ii), 4(2)(c); Copyright Act, 1957 - Sections 11, 14, 31 |
| Judgement Date | October 01, 2014 |
| Court | Competition Commision of India |
Order:
Order under Section 27 of the Competition Act, 2002
-
The present information has been filed by M/s. HT Media Limited ('the informant') under section 19(1) (a) of the Competition Act, 2002 ('the Act') against M/s. Super Cassettes Industries Limited ('the opposite party') alleging inter alia contravention of the provisions of sections 3 and 4 of the Act.
Facts
-
Factual matrix, as unfolded in the information, may be briefly noted.
-
The informant claims to be one of the leading media companies in India. As per the informant, apart from being engaged in the business of print media under the aegis of 'Hindustan Times', it has diversified its ambit into electronic media and has launched an FM radio channel called Fever 104, which is currently operational in Delhi, Mumbai, Kolkata and Bengaluru. It is stated that Fever 104 largely plays Bollywood film music and since its coming into operation in Delhi (October 2006), Mumbai (January 2007) and Kolkata (January 2008), it has developed a strong listenership in these metros.
-
It is averred that the opposite party, known under the brand name of T-Series, was founded by the late Shri Gulshan Kumar and is engaged in manufacture, production and publication of music and videos in India and internationally and also offers its repertoire of music to television stations, radio stations and mobile companies for use and broadcast.
-
The informant has alleged that the opposite party, which is the largest private publisher of Indian music and owns/controls over 70% of the latest Bollywood music, is abusing its dominant position in contravention of the provisions of section 4 of the Act by (i) charging excessive amount as license fees/royalty from the informant for grant of rights for the broadcast of the opposite party's music content on Fever 104 radio station; (ii) imposing minimum commitment charges ('MCC') to be paid to the opposite party per month irrespective of actual needle hour (each aggregate of sixty minutes of actual broadcast of sound recordings by FM radio station excluding commercials, advertisements, voice over, anchor time etc.) of broadcast of the opposite party's music content by the informant and (iii) making conclusion of licensing arrangements with the opposite party subject to the acceptance of license fees and MCC imposed by them. The informant has further alleged that such imposition of exorbitant license fees and MCC by the opposite party is an unfair condition imposed by it for granting license to broadcast its music content on radio under the Act which limits and restricts the right of the informant to broadcast its music content of other music companies/composers thereby limiting the choice of music for the end consumers to only the opposite party's music content and results in denial of market access for other music companies (publishers, copyright societies etc.) with less market share and bargaining power.
-
The informant has also alleged that the opposite party is infringing section 3 of the Act by requiring radio stations including Fever 104 to enter into a license agreement to broadcast its music content, the terms whereof are anti-competitive. As per the informant, the said agreement permits the licensee to broadcast music subject to acceptance of onerous conditions such as MCC obligations, which has the effect of restricting around 30-40% of the radio stations' broadcast to the opposite party's music content. Such conditions imposed by the opposite party have resulted in depriving consumers of their right to listen to their choice of music and also distort competition in favour of the opposite party as the conditions imposed force FM radio stations to predominantly broadcast the opposite party's music content thereby causing an appreciable adverse effect on competition in the relevant market in India.
-
The informant has further detailed the allegations against the opposite party which are summarized in the succeeding paras.
License Fee
-
The informant has stated that it was granted permission, through a bidding process, by the Government of India to set up and operate FM radio stations in four metro cities, and pursuant to grant of permission, the Government entered into a Grant of Permission Agreement ('GOPA') with the informant. Accordingly, the informant entered into license agreements with copyright societies such as Phonographic Performance Limited ('PPL'), Indian Performing Right Society Limited ('IPRS') as well as music companies such as the opposite party, Reliance Big Music, Yash Raj Music etc., to acquire rights to broadcast their music on its FM stations.
-
The informant has averred that under the terms of such agreements, the license was based on the license fees as determined by the Copyright Board in its order dated 19.11.2002 in the case of Music Broadcast Pvt. Ltd. v. Phonographic Performance Limited ('First Order of the Copyright Board'), under which compulsory licenses were granted and royalty was fixed at an average rate of INR. 660 per needle hour. This First Order of the Copyright Board was challenged before the Bombay High Court by PPL citing the royalty rates as excessive, wherein the Bombay High Court had remanded the matter back to the Copyright Board for fresh fixation of rates. Aggrieved by the said order, the radio stations and PPL filed special leave petitions before the Supreme Court of India.
-
The informant has further alleged that as it lacked the bargaining power to negotiate license fees with the opposite party, the parties agreed to adopt the then existing market standard rate as the rate of payment of license fees i.e. an average rate of INR 660 per needle hour decided by the Copyright Board in its First Order. In the meantime, the Supreme Court set aside the First Order of the Copyright Board and referred the matter back to the Copyright Board to consider the issue of rates of royalties to be charged by PPL afresh. By way of order dated August 25, 2010 ('Second Order of the Copyright Board'), the Copyright Board determined the royalty rates as '2 % of net advertisement of each radio station accruing from the radio business only for that radio station.'
-
The informant avers that following the Second Order of the Copyright Board, the informant and other radio stations individually approached the opposite party for applying the rates as fixed by the Second Order. However, the opposite party filed a writ petition before the Delhi High Court challenging the applicability of the rates and vide interim order dated September 15, 2010, the Delhi High Court granted an injunction in favour of the opposite party against the application of the Second Order of the Copyright Board on the ground that the opposite party was not a party to the proceedings before the Copyright Board.
-
The informant has submitted that since the opposite party refused to apply the rates as fixed by the Copyright Board, it filed an application before the Copyright Board for grant of compulsory license on reasonable royalty on September 24, 2010 which is pending adjudication.
-
The informant has submitted that since the license granted by the opposite party was scheduled to expire on October 25, 2010, the informant received a legal notice dated October 15, 2010 from the opposite party for renewal of license terms, which the informant agreed to do under the current rate, subject to the outcome of any orders of the Copyright Board. The informant has further submitted that in order to survive in the FM Radio industry, the informant had no choice but to accede to the unreasonable terms imposed by the opposite party, which has rights over premium music content.
MCC
-
The informant has stated that the opposite party imposes an amount of INR 1,25,000 per month each as MCC for sound recording and for performance rights. Thus, the informant is required to pay an amount of INR 2,50,000 per month equivalent to 189 hours per station to the opposite party, irrespective of whether or not it broadcasts the opposite party's music content and/or the number of needle hours consumed by the opposite party's music. Hence, it is alleged that the informant was made to pay higher royalty rates as MCC than the amount actually incurred by it based on the actual amount of needle hour consumed by the opposite party's music, which is unfair and abusive.
-
The informant has submitted that most of the radio stations are running into losses and therefore, in such a situation imposing exorbitant royalties and MCC obligations makes it unviable for radio stations to sustain let alone make profits. Furthermore, such imposition of MCC restricts the ability of radio stations to license music content of other owners thereby adversely affecting competition in India.
-
It is further stated in the information that music companies may register themselves with a copyright society entrusted with the administration of recording rights to provide blanket licenses to users or, like the opposite party, license the broadcasting rights of its music catalogue on its own and earn royalties in return. It is pointed out that the music industry grants different licenses to different users and based on such rights, earns its revenue from five main sources, which include physical sales through audio cassettes and CDs, mobile Value Added Services ('VAS'), radio broadcast, online download and public performance. According to the informant, different rights are provided to different users by music providers/copyright societies, which constitute separate markets.
-
The informant has stated that the three main sources of broadcast of music are FM radio, television and mobile VAS. One of the main distinguishing factors of radio from other broadcasting sources is that it is free-to-air; non-subscription based and is easily and widely available to end consumers. Additionally, costs associated with radio are much lower. Thus, radio cannot be substituted with broadcast of music on...
To continue reading
Request your trial