Appeal No. 13/2016 and I.A. No. 08/2017. Case: Karnataka Film Chamber of Commerce Vs Kannada Grahakara Koota and Ors.. COMPAT (Competition Appellate Tribunal)
| Case Number | Appeal No. 13/2016 and I.A. No. 08/2017 |
| Counsel | For Appellant: Balaji Srinivasan and K. Harshavardhan, Advocates and For Respondents: Aniruddha Deshmukh, Advocate |
| Judges | Rajeev Kher and Anita Kapur, Members |
| Issue | Competition Act, 2002 - Sections 19(1)(a), 19(3), 19(3) (c), 2, 2(h), 2(l), 27, 27(b), 3, 3 (3), 3 (3) (b), 3 (3)(b), 3(1), 3(3), 3(3) (b), 3(3)(b), 4 |
| Judgement Date | April 10, 2017 |
| Court | COMPAT (Competition Appellate Tribunal) |
Order:
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Karnataka Film Chamber of Commerce (KFCC), the Appellant in this case is aggrieved by the order dated 27.07.2015 of the Competition Commission of India (hereafter referred to as, 'the Commission') passed under Section 27 of the Competition Act, 2002 (for short, 'the Act'). The Commission found that the conduct of the Appellant, the Karnataka Television Association (KTVA) and the Kannada Film Producers Association (KFPA) resulted in limiting and restricting the market of dubbed films/serials in Kannada language and was in contravention of Section 3(1) read with Section 3(3)(b) of the Act. The Commission directed the Appellant, KTVA and KFPA to cease and desist from indulging in practices found to be anticompetitive and to bring out a Competition Compliance Manual to educate their members about the competition law principles and play an active role in creating awareness among their members of the provisions of the Act through competition advocacy. Further, a penalty of Rs. 16,82,204 was imposed on the Appellant. Penalty of Rs. 1,74,293 and Rs. 1,68,124 was imposed on KTVA and KFPA respectively.
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The Appellant is an association of film producers, distributors and theatre owners. It is registered as a non-profit society under the Karnataka Societies Registration Act, 1960. The facts of the case are that, Kannada Grahakara Koota (Respondent No. 1) and Shri Ganesh Chetan (Respondent No. 2) had filed information in terms of Section 19(1)(a) of the Act alleging anti-competitive practices and cartelization within the Karnataka Film and television industry. The information was filed against the Appellant, KTVA, KFPA, Karnataka Film Directors Association (KFDA), Karnataka Chalanachitra Academy (KCA) and Karnataka Film Artists, Workers and Technicians Union(KFAWTU). The thrust of the Informants' allegation was that the market of films and television shows within the State of Karnataka was restricted due to the collective action of these associations, prohibiting telecasting of dubbed content from any other language into Kannada, and banning making, releasing and exhibiting of dubbed films. Specific instances of alleged blocking of telecast of dubbed TV serials "Satyameva Jayate" and Rani Laxmibai of Jhansi and exhibition of film "Koffi Shop", were cited in this context.
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The Commission was of the opinion that, there existed a prima facie case and vide its order dated 18.10.2012 directed the Director General (DG) to cause an investigation to be made into the matter. The DG submitted its investigation report dated 29.4.2013 with the conclusion that the Appellant, KTVA and KFPA had indulged in anticompetitive conduct by putting restrictions on the production and exhibition of dubbed version of films/TV programmes of non-Kannada language, in contravention of Section 3(1) and Section 3(3)(b) of the Act. The DG was of the view that, the activities of other associations were not within the purview of Section 3(3) of the Act as these were not the associations of enterprises engaged in the production and exhibition/telecast of films or TV programmes.
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Since KFCC is the Appellant before us, we are, in this order, limiting our analysis to the factual and legal issues pertaining to the conduct of KFCC.
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The specific findings of the DG, in so far as these concern the Appellant, were as follow:
(i) The films and TV programmes were interchangeable in character as most of the persons engaged in the films were also engaged in the TV programmes and the process of producing films and TV programmes was similar and only the medium of exhibition made them different in nature. The claim of the Appellant that the films and TV programmes were different markets was not acceptable. The rules/regulations and market conditions for carrying out the business of film/TV production and exhibition were different in Karnataka from the other states, making Karnataka a different geographical market. The relevant market for the purpose of investigation, therefore, was the "production and exhibition/telecast of films and TV programmes in the State of Karnataka."
(ii) The Appellant was the most important organisation of the film industry of Karnataka and was the parental body of all the film trade associations. Governmental bodies like Film Certification and Censor Board and Karnataka State Information Department recognised the Appellant as representative of the entire Kannada film industry and title registration, publicity clearance, certificates for tax exemption of Kannada movies, were generally granted on the recommendations of the Appellant.
(iii) The Appellant enjoyed a great market power in film production, distribution and exhibition, in Karnataka. KTVA had similar status in the TV industry in Karnataka. KFPA, was an association of film producers of the Kannada film industry and exercised its power jointly with the Appellant to implement its decisions. The producer members of these associations were generally common as a film producer may also be producer of TV programmes.
(iv) Dubbing of foreign films and TV shows was permitted internationally and also in India. However, no dubbed film or TV programme had been released in Karnataka in the last 40-50 years. The restriction on dubbed contents was prevalent only in Karnataka and to some extent in West Bengal. The case regarding the State of West Bengal had been separately investigated and in that case viz 16/2011, the Commission had found such restrictions violative of Section 3 (3) of the Act.
(v) The bye-laws of the Appellant did not contain restrictions on other language films or programmes but in practice the Appellant had opposed dubbed films. Restriction of dubbed TV programmes had been spearheaded by KTVA along with the Appellant and other associations.
(vi) The stance of the Appellant that it was not concerned with TV industry was contrary to the material on record. The Business head of Asia Net (Suvarna Channel) had written a letter dated 16.4.2012 to the Appellant requesting for its cooperation for telecast of a Hindi serial 'Satyameva Jayate' with Kannada subtitles, on Suvarna channel. Aamir Khan, the producer of the programme addressed a similar letter dated nil to the President of the Appellant. The letter dated 16.4.2012 (ibid) was forwarded by the Appellant to KTVA on 18.4.2012. KTVA asked its dubbing Committee to take a decision, and on 20.4.2012 Suvarna Channel invited KTVA to discuss the matter after which Suvarna channel decided not to telecast the said programme with subtitles in Kannada. KTVA admittedly did not agree for telecast of this programme following a policy of protection of Kannada language and culture and in line with the position taken by Karnataka Sahithya Parishad, and vide letter dated 24.4.2012, KTVA informed the Appellant that the proposal of Suvarna channel cannot be allowed as it was a non-kannada programme. The Appellant wrote to Aamir Khan on 3.5.2012 informing that the subject matter of his letter was a matter between him and the channel concerned which had taken a decision in accordance with the decision of KTVA.
(vii) The Suvarna channel, in its response to the DG's letter had, inter-alia, stated that "............Mr. Aamir Khan, the producer of the programme had personally written to KFCC for extending support to have the programme dubbed in Kannada and telecast in Suvarna Channel. As KFCC did not respond as sought for and as there exists an informal embargo by them on dubbing movies or programmes of other language into Kannada, we had proposed to telecast the original Hindi version with Kannada subtitles in our Suvarna channel. We had written to KFCC and KTA to secure their cooperation for telecast of the programme in its original language, i.e. Hindi with sub-titles in Kannada. KFCC and KTA did not respond to these letters. As we apprehended violent resistance and protest from KFCC and/or KTA if we still went ahead with our proposal, we did not telecast the programme."
The above stated facts confirmed that, due to the practices and decisions of these associations the serial 'Satyameva Jayate' could not be telecast on Suvarna Channel.
(viii) KTVA accepted its role in opposing dubbed content of 'Jhansi ki Rani'.
(ix) During investigation in earlier cases against the Appellant, it was found that the Appellant imposed restrictions on distribution and exhibition of dubbed films in Kannada language. Though the Appellant, during the current investigation denied imposition of such restrictions, the evidence of Sh. Geetha Krishna, producer of the film 'Koffi Shop', supports the informants' allegation of restrictive practices of the Appellant. Shri Geetha Krishna stated as follows:
"I had lost several crores of rupees business because of gross interference from KFCC in the release of his Kannada film 'Koffi Shop' which was cleared by the Central Board of Karnataka since it was a straight film. KFCC has mischievously alleged that the film 'Koffi Shop' was a dubbed film. In fact, "Koffi Shop" was straight film shot separately along with two other films in Telugu and Tamil. (I have enclosed copies of the Censor Board certificate as well as the letter issued by the Karnataka Government granting 100 per cent tax exemption given only to straight films).
As they are fully aware that their restrictions have no legal validity, they never commit any of their authoritarian instructions in writing. They resort to communicating all their wrongful instructions through phone calls and SMS. The modus operandi they adopt to harass 'outside' producers like me is to hold secret meetings and gather misguided people and hooligans and provoke them to damage cinemas which decide to screen the films 'banned' by KFCC.
A couple of newspapers heavily dependent on film advertisement are threatened not to carry advertisements released by producers of films opposed by KFCC. One of written evidences I got was a letter KFCC had sent to newspaper advertisement...
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