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Cartelization in film industry in India

, February 16, 2018, 0 Comments

cartelization-film-industry-india-marketexpress-inThe informants have alleged that the theatre owners, association of film theatres, various trade associations whose members are inter-alia engaged in the business of films and TV serials exhibition, production and distribution have formed a cartel.

Trade association was used as a platform to fulfil illegitimate objectives like taking collective decisions which are anti- competitive, issuing anti-competitive circulars/diktats, issuing sanctions against those who disregard such anti-competitive diktats/directions, facilitate collusive / collective decision making with the intention of limiting or controlling the production, distribution, sale / price of films.

Some of the instances of cartelization (section 3(3)) are:

Kerala Film Exhibitors Federation (KFEF) is guilty of directing the distributors not to supply movie prints of Malayalam and Tamil language movies to M/s. Crown Theatre. And if a distributor does not agree to the instructions of KFEF, that distributor is boycotted and the distributor’s movies would not be screened in the State of Kerala in its member’s theatres.

Similarly, M/s PVR Ltd., Complained that the conduct of M/s Film Distributors Association (Kerala) FDA (K) of imposing the revenue sharing pattern instead of allowing PVR to negotiate independently with the individual distributors of the association. Also, they imposed fines/penalties for non-obedience, disallowed films to be exhibited in other theatres in Kerala.

Reasoning given by CCI: Denying market access to other language films or programs by Karnataka Film Chamber of Commerce (KFCC) is not justified as it is the choice of a film producer or artiste as to whether his film should be dubbed in other language or not. Similarly the viewer should have the choice as to which movie/programme to watch. Thus, Commission held that limiting the distribution of movies to pre-determined release centres by the Kerala Film Exhibitors Federation and Others violates the provisions of section 3(3)(b) read with section 3(1) of the Act.

Anupam Sanghi Associates Comment: The age old associations are used as platforms to cartelize and create a barrier for an open market, entry of new players and technology. The film associations cannot resist new technology or innovative & better tech solutions in the garb of an association as the competitive forces evident by the choices of consumers will take over and not get the protection of competition law.

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