Appeal No. 42/2016. Case: K. Sera Sera Digital Cinema Pvt. Ltd. Vs Digital Cinema Initiatives, LLC and Ors.. COMPAT (Competition Appellate Tribunal)
| Case Number | Appeal No. 42/2016 |
| Counsel | For Appellant: Rachit Batra, Sushil Shukla and Babul Biswas, Advocates |
| Judges | G.S. Singhvi, J. (Chairman), Rajeev Kher and Anita Kapur, Members |
| Issue | Competition Act, 2002 - Sections 19, 2, 26, 26(1), 3, 3(3)(a), 3(3)(b), 3(4)(a), 3(4)(b), 3(4)(d), 3(5), 4, 4(2)(b), 4(2)(c) |
| Judgement Date | November 09, 2016 |
| Court | COMPAT (Competition Appellate Tribunal) |
Order:
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This matter has bounced back into our lap by virtue of the order dated 08.06.2016 made by the Competition Commission of India (The Commission). Earlier Commission's order dated 22.04.2015 in Case No. 30/2015 was challenged before this Tribunal. The Tribunal had decided the appeal on 08.12.2015 remitting the matter back to the Commission with certain directions.
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The facts of the case can very briefly be summarized as follows:-
The appellant is a company engaged in the business of digital cinema services which mainly involve digital projection and screening of films in India through their proprietary technology called Sky Cinex technology. The Respondent Nos. 2 to 7 are producers of Hollywood films and respondent No. 1 is a joint venture of Respondent Nos. 2 to 7. Respondent Nos. 2 to 7 have agreed between themselves to promote a technology for providing cinema screening in the auspices of respondent No. 1. The technology is called D-cinema technology. The appellant's case is that the Respondent Nos. 2 to 7 together controlled production of more than 80% of Hollywood films and that they mandate the screening of their films by the use of D-cinema technology and no other technology. Those exhibitors who want to use non D-cinema technology for screening of Hollywood films are not released Hollywood films thereby getting excluded from the line of business. Most of such exhibitors use the E-cinema technology propagated by the appellant. Therefore, the appellant's case is that by this conduct of respondents they are excluding any other method of exhibition of Hollywood films and, therefore, have resorted to anti competitive conduct. Appellant has alleged that Respondent Nos. 2 to 7 have constituted a cartel to carry out this exclusionary practice. Appellant has also alleged that since Respondent Nos. 2 to 7 have a dominance in production of Hollywood films, they are abusing their dominance by mandating release of their films only through use of D-cinema technology.
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Respondents have defended their act by stating that their technology is superior in nature, it provides piracy proof exhibition and the adoption of technology is entirely voluntary. The respondents have further stated that their line of business has strong sensitivity to potential intellectual property infringements and therefore, use of such technology is necessary for them. They have also stated that the adoption of this technology is entirely voluntary. However, they further state that in order to protect their intellectual property they release their films only to those who adopt this particular technology. In order to justify their conduct, respondents have claimed the protection of Section 3(5) of the Competition Act, which allows some reasonable restrictions by an intellectual property owner in order to protect intellectual property against infringements.
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In order to recapitulate the allegations made by appellant against the respondents, we quote from para 13 of the impugned order below:
"13. The Informant has alleged that: (i) OPs are imposing their revenue sharing agreements on the cinema theatre owners which leads to increase in the ticket prices in contravention of the provisions of Section 3(3)(a) of the Act, (ii) OPs are not allowing the cinema theatre owners to install the servers and projectors of their choice which deprives a large number of viewers from watching movies in a theatre of their choice at a competitive ticket price in violation of Section 3(3)(b) of the Act, (iii) the conduct OPs result in tie-in arrangement as they require the cinema theatre owners and digital cinema technology companies to purchase and use the equipment certified/accredited by them as one of the conditions to purchase/play the movie in their theatres in contravention of Section 3(4)(a) of the Act, (iv) OPs are restricting cinema theatre owners from acquiring the equipment of the Informant or other companies which are not certified by OP 1 in contravention of Section 3(4)(b) of the Act, (v)...
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