Competition LawRulings

CCI holds that there is no collusion between PVR, INOX and other multiplexes w.r.t Virtual Print Fee

Unilazer Ventures Private Limited vs. PVR Ltd.

CCI rejects information against multiplex houses due to non-contravention of Section 3 of the Competition Act, 2002 by them; says imposition of Virtual Print Fee did not indicate collusion between the OPs. 

In the present matter, Unilazer Ventures Private Limited (Informant) has filed information against various multiplex chains – PVR Ltd. (“OP-1”), Inox Leisure Ltd. (“OP-2”), Cinepolis India Pvt. Ltd. (“OP-3”), Carnival Motion Pictures Pvt. Ltd. (“OP-4”) and FICCI Multiplex Association of India (“OP-5”) alleging that they have contravened the provisions of Section 3(3) read with Section 3(1) of the Competition Act, 2002. The Informant has alleged that OPs in the instant case have colluded among themselves to carry out anti-competitive practices such as imposition of Virtual Print Fee (VPF), imposition of non-negotiable standard terms in agreements, delay in receipt of the share of the revenue, which are in contravention of the provisions of Section 3(3) read with Section 3(1) of the Act.

CCI observes that contravention of the provisions of Section 3(3) read with Section 3(1) of the Act requires an agreement between entities engaged in identical or similar trade which causes an appreciable adverse effect on competition in markets in India and no indication of any such agreement or arrangement or understanding between the OPs has been placed on record. CCI further observes that, “ in order to establish a prima facie case for contravention of the provisions of Section 3 of the Act, it is important that the evidence on record demonstrates some meeting of minds.With regards the Informant’s allegation that all the OPs indulged in parallel conduct and under the garb of standard industry practices acted in an anticompetitive manner, CCI observes that it is an established principle of competition law that mere parallel behaviour, by itself, does not amount to a concerted practice and the Informant has failed to adduce any plus factors”. 

CCI further notes that  mere alleged parallel conduct in an oligopolistic market is not sufficient to prima facie establish collusion amongst the OPs warranting an investigation by the DG. CCI examines the allegations individually. 

Allegation of Undue imposition of Virtual Print Fee

CCI observes that the Informant was aggrieved with the undue imposition of the VPF after a certain period. CCI further observes that no formal/ written agreement pertaining to imposition of VPF amongst the Informant. CCI holds that the Informant and the OPs have agreed to the fact that the whole process of imposition of VPF is a practice which has originated from Hollywood and adopted in Indian cinema as well, without any formal/ written agreement to back it. Since there is no written agreement, as a corollary, the question of formal arrangement of ‘Sunset-clause’ does not exist. CCI further observes that there is no evidence to indicate that OP-1, OP-2, OP-3 and OP-4 met under the aegis of OP-5 or used its platform to arrive at a common VPF to be charged from producers.  

In the instant case, CCI mentions that, 

“to determine as to what should be the appropriate fee and till what time period it may be equitable to charge the same, is a question which does not fall within the domain of the Commission. As long as the fee is not the result of a concerted activity among the OPs and has been independently arrived at, it may not be proper for the Commission to delve into the same.”

In addition, CCI holds that facts and evidence do not support the stand of the Informant that there was any anti-competitive agreement or understanding leading to imposition of VPF on the Informant. 

Allegation of Arbitrary standard non-negotiable Revenue Sharing Agreements

CCI observes that the revenue sharing arrangement was put in place with the consent and due deliberations between producers and multiplex owners and the Informant has not been able to demonstrate that such an arrangement is pursuant to any anti-competitive agreement among OPs. Furthermore, CCI observes that the issues pertaining to the terms of the revenue sharing agreement are commercial/ contractual in nature and without any concerted action or agreement or understanding and do not give rise to any competition concern under the provisions of the Act.

Allegations as regards Delay in payments made to content companies

CCI observes that the Informant has not placed on record any evidence which substantiates its claim that OPs have acted in concert or out of an understanding for the alleged conduct. Further, CCI also notes the submission of OP-3 that multiplexes are obligated to pay an interest at the rate of 18% per annum to the film producers (including the Informant) for delay in such payments. Therefore,  CCI finds that this allegation of the Informant also does not have any merit.

Allegations of Lack of transparency in exhibition of trailers and promotions during Intervals

CCI observes that the general allegations made in the instant case, including lack of transparency in exhibition of trailers and promotions, do not fall within the ambit of the provisions of the Act.

CCI, thus, dismisses the information for lack of merit and holds that there has been no contravention of Section 3 of the Act by the OPs.

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