Case No. 56 of 2011. Case: M/s. Cinergy Independent Film Services Pvt. Ltd. Vs Telangana Telugu Film Distributors Association and Ors.. Competition Commision of India
| Case Number | Case No. 56 of 2011 |
| Counsel | For Appellant: Sh. Harshvardhan Jha and Sh. Ravindra Suyavanshi, Advocates and For Respondents: Ms. Sangeeta Kumar, Advocate for Opposite Party No. 1, Sh. Balaji Srinivasan, Ms. Jai Kriti S. Sachdeva, Advocates for Opposite Party No. 2, Sh. Nand Kumar Bele, Secretary-General for Opposite Party No. 3, Sh. P. Subramainum, Member and Authorised ... |
| Judges | Ashok Chawla Chairperson, H.C. Gupta Member, Geeta Gouri, Member, R. Prasad, Member, Anurag Goel, Member, M.L. Tayal, Member and S.N. Dhingra Member |
| Issue | Competition Act, 2002 - Sections 19(1)(a), 27, 27(b), 3, 3(1), 3(3), 3(3)(b), 4 |
| Judgement Date | January 10, 2013 |
| Court | Competition Commision of India |
Judgment:
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The present information has been filed under section 19(1)(a) of the Competition Act, 2002 ('the Act') by M/s. Cinergy Independent Film Services Pvt. Ltd. ('the informant') against M/s. Telangana Telugu Film Distributors Association ('the opposite party No. 1'/TTFDA), M/s. Karnataka Film Chamber of Commerce ('the opposite party No. 2'/KFCA), M/s. Indian Film Exporters Association (now known as Indian Council of Impex for Films & TV Programmes) ('the opposite party No. 3'/IMPEX), M/s. Andhra Film Chamber of Commerce ('the opposite party No. 4'/AFCC) and M/s. Big Bang Media Pvt. Ltd. ('the opposite party No. 5') alleging inter alia contravention of the provisions of sections 3 and 4 of the Act. Shorn of details, the informant is a company incorporated under the Companies Act, 1956 and engaged inter alia in the business of production and distribution of cinematographic films. The opposite party Nos. 1, 2 and 4 are the associations of film producers, distributors and exhibitors acting as regulatory bodies for production, distribution and exhibition of films in their respective territories. The opposite party No. 3 is an association of distributors engaged in import and export of Indian films/TV programmes. The opposite party No. 5 is a company engaged inter alia in the business of production and distribution of cinematograph films.
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It is alleged by the informant that the opposite party associations make it compulsory for every film distributor to become their member and/or register his/its film with them before the exhibition of such film. A distributor who refuses to become a member and/or refuses to register his film with them is not allowed to distribute and exhibit his/its film in the territory which is governed/regulated by the respective opposite party association. The opposite party associations enforce such compulsion on distributors by threatening their members of serious consequences for exhibiting films of a distributor who is not a member of any of the opposite party associations or whose film is not registered with them. On account of such threats, the cinema exhibitors who are neutral parties are unwilling to undertake the risk of exhibiting the film of a distributor who is not a member of the opposite party associations or whose film is not registered with them. It is further alleged that although the distributors only acquire the theatrical distribution rights of the films, these associations make those distributors sign their standard form of registration which has clauses putting an undertaking of the distributors not to exploit other rights of such film (satellite rights/home video rights etc.) for a certain period. It is averred that the distributors of the films have no choice but to sign these forms even when they don't have any control over other rights of such films other than theatrical exploitation rights.
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Coming to the specific grievance of the informant, it is averred that the opposite party No. 1 vide its circular dated 10.09.2011 directed its members not to release the film 'Mausam' slated for release on 16.09.2011, in its territory unless the claim of its member viz. M/s. Suresh Productions Pvt. Ltd. of Rs. 2.5 crores was settled. The opposite party No. 3 vide its letter dated 10.09.2011 conveyed to the informant that it would inform its members to intervene in the distribution of the film 'Mausam' until recovery of dues of M/s. Suresh Productions Pvt. Ltd. It is further averred that the said claim of Rs. 2.5 crores was due against one Shri Madhu Mantena of M/s. Big Bang Media Pvt. Ltd. i.e. the opposite party No. 5 herein in connection with the production of film 'Rann'. It is, thus, alleged that the opposite party associations acted malafidely and arbitrarily in boycotting the film 'Mausam' with an effort to secure a claim of their member viz., M/s. Suresh Productions Pvt. Ltd. It is further alleged that Shri D. Suresh Babu, Managing Director of M/s. Suresh Productions Pvt. Ltd., who is also the President of the opposite party No. 4 misused his position in order to recover the claim against the opposite party No. 5 by preventing the release of the film 'Mausam' produced by the informant.
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Based on these averments and allegations, the informant has alleged that the actions of the opposite party associations have contravened the provisions of section 3 and section 4 of the Competition Act, 2002.
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After considering the information and the material available on record, the Commission on 15.09.2011 directed the Director General (DG) to conduct an investigation into the matter and to submit a report. Accordingly, on completion of the investigation, the Office of the DG submitted its report to the Commission on 05.03.2012.
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The DG in the report concluded that the allegations relating to infringement of the provisions of the Act were found to be correct against the opposite party Nos. 1, 2 and 4. It was noted that the bye laws and conduct of these opposite parties were restrictive in nature and controlled the film distribution business. In an effort to regulate the film distribution and exhibition in their respective territories, they have crossed the limits of the activities of an association and have hampered the process of free competition. The tools adopted by these associations to settle the disputes between the affected parties were not found to be in conformity with the law. Instead of creating a legitimate mechanism to settle the disputes, it was found by the DG that these associations were coercing the producers/members to follow their directions. These opposite parties were found to be indulging in anti-competitive practices with regard to limiting and controlling provisions of services of film distribution and exhibition. Further, the opposite party Nos. 1, 2 and 4 were found to have restricted the market of film distribution in their territories by taking decisions to not deal with film 'Mausam' unless their directions are obeyed. The aforesaid anti-competitive activities of these opposite parties were found to be anticompetitive in contravention of the provisions of section 3(3)(b) of the Act. However, no contravention of the provisions of the Act was found against the opposite party Nos. 3 and 5.
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The Commission considered the report of the DG in its ordinary meeting held on 22.03.2012 and vide its order of even date decided to forward copies thereof to the informant and the opposite parties to file their respective replies/objections thereto. The copies of the report were also forwarded to the office-bearers of the opposite party associations.
KFCC
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KFCC in its reply submitted that it is an association of film producers, theatre owners and distributors in the State of Karnataka. It is only a regulatory body in so far as it relates to the production, distribution and exhibition of films by its members in the territory of Karnataka. It is stated to be affiliated to South Indian Film Chamber of Commerce and Film Federation of India which are the highest bodies regulating production and exhibition of films.
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It has been submitted that the membership of KFCC is voluntary and it is not compulsory for every film distributor to become its member before exhibition of films. Further, it is stated that the association has not given any direction to its members regarding release of the film 'Mausam'. It has also not imposed any restriction of any nature on the release and/or exhibition of the said film. The object of KFCC is to promote the Kannada film industry which is a very small industry with limited audience being confined only to the State of Karnataka and is facing the threat of being wiped out owing to the monopolistic capture of the market by multinational corporations such as the informant herein.
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KFCC is striving to keep the Kannada film industry running amidst the huge competition from the multinational corporations like the informant. It has been submitted that as an association it is the duty of KFCC to attend to the complaints filed by its members and resolve the disputes and it is in connection with the complaint received by one of its members that KFCC issued a letter requesting the informant to be present for the arbitration proceedings in order to resolve the dispute between the informant and its member.
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KFCC has not issued any direction regarding the release of the film 'Mausam' by the informant in its letter. Objection is taken to the finding of the DG to the effect that KFCC pressurized the producer of the film 'Mausam' by issuing circular/letters for not dealing with the film or threatening to settle the outstanding payments of the member and/or taking decision to not deal with the film unless the dispute is resolved. Thus, it is urged that there was no basis of the finding of the DG.
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The letter was issued by KFCC only with the object to resolve the dispute amicably and there was no other intention behind issuing the letter which is clear from the fact that no adverse directive was made by KFCC even though the informant did not attend the proceedings initiated by it. It is further submitted that it is because of the conduct of the informant in not clearing the dues payable to certain exhibitors that the other exhibitors were reluctant to enter into agreements with the sub-distributors and not due to any circular or directive issued by the opposite party associations. In the business circle, if a person/company fails to clear its dues or to abide by the contractual terms, other persons/companies will be wary of making any further dealings with such defaulting person/company.
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In the present case also as the informant had not cleared dues to certain exhibitors, the other exhibitors were wary/reluctant to deal with it. However, the informant instead of resolving the dispute approached the Commission alleging anti-competitive activities only with an intention to wriggle out of the liability to clear the dues payable by...
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