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The Competition Commission of India on May 25, 2011 disposed off the first ever case filed before it and imposed a nominal penalty of Rs. 1 lakh each on 27 film producers on charges of colluding through a cartel to exploit multiplex owners.
The Competition Commission of India (CCI) on May 25, 2011 disposed off the first ever case filed before it and imposed a nominal penalty of Rs. 1 lakh each on 27 film producers on charges of colluding through a cartel to exploit multiplex owners.
The issue relates to the strike in 2009 by film producers who decided not to screen their movies in multiplexes because of the conflict over revenue sharing ratio. Some of the producers included Yash Chopra of Yash Raj Group, Aamir Khan, Shahrukh Khan, Karan Johar, Ramesh Sippy, Ronnie Screwvala, Ramesh Taurani of Tips Industries, Ramesh. G. Sippy, Ashutosh Gowariker of AG Pvt. Ltd., Vidhu Vinod Chopra, Rakesh Roshan of Film Craft Private Ltd. etc.
CCI has found the film producers to be in violation of Sections 3 and 4 of the Competition Act 2002, which pertains to anti-competitive agreement and abuse of dominant position.
The FICCI – Multiplex Association of India had on May 25, 2009 through its advocates, Luthra & Luthra Law Offices filed the case before the CCI. The case was filed against the United Producers and Distributors Forum, the Association of Motion Pictures, the TV Programme Producers and Film and TV Producers Guild of India, among others.
Luthra team was led by Senior Partner Bobby Chandhoke, Partner G.R. Bhatia along with Senior Associate Ravisekhar Nair.
Speaking to Bar & Bench, Partner G. R. Bhatia said, “I think it is the first ever order in the Indian competition jurisprudence where penalty has been imposed. It also sends a message that if you are indulging in cartels, you are vulnerable and you are subject to strict penalty and adverse sections. It is a signal to all those markets where cartel is suspected, they should take a note of this. It is advisable for them to keep themselves at the right side of the law”.
The Director General, CCI who had investigated the case filed by the Multiplex Association of India, had reportedly found film and TV producers entering into anti- competitive agreements to collectively stop distribution of some films.
During the showdown between film producers and multiplexes in April and May 2009, consumers faced scarcity of choice for viewing films as no new films were released. There was loss of revenue to multiplex owners. Multiplexes could release only some low budget movies during the period. The strike was finally called off in June shortly after CCI complaint was filed.
The CCI has given its order exactly two years after the date of filing of the information. CCI has imposed the fine on filmmakers for entering into anti-competitive agreement.
For a copy of the order please click here.