Exclusive agreements with theatres can reduce competition: CCI calls for DG investigation against BookMyShow

The Competition Commission of India (CCI) has called for an investigation against online ticket platform BookMyShow, noting that its exclusive agreements with cinemas and multiplexes can potentially reduce competition in the relevant market. [In Re: Showtyme (through Vijay Gopal, prop. of Vanila Entertainments) and Big Tree Entertainment Pvt Ltd].The competition regulator decided the same while dealing with information alleging that BookMyShow, along with Cinepolis, INOX, PVR and other theatres were acting in contravention of Sections 3 and 4 of the Competition Act, 2002."The Commission notes that exclusive agreements with single screen cinema theatres...do not allow these cinemas to directly or indirectly engage any entity for providing services similar to the services of BookMyShow or facilitating booking/sales of tickets through any online medium. Such exclusive agreements have the potential to foreclose or reduce competition in the relevant market..." the order stated..While the order called for a Director General (DG) investigation against BookMyShow, the Commission stated that the role of the impleaded cinema theatres in the alleged anti-competitive conduct is not forthcoming at this stage..The informant, the proprietor of an online movie ticketing portal called Showtyme, alleged that BookMyShow charges a higher convenience fee and shares 50% of the same with the cinema houses as commission, making it difficult for new entrants to offer services at a lesser price. In addition, he made the following allegations:BookMyShow has signed ‘exclusive and refusal to deal’ agreements with the cinema houses. Such agreements allow BookMyShow to provide services at exorbitant prices and bind the cinema houses to sell their tickets through its platform in exchange for commission BookMyShow was creating a cartel with theatres/multiplexes and killing competition by entering into exclusive contracts with them. This is resulting in the increase in price of movie tickets by upto 19-25 per ticket, which is detrimental to consumers. BookMyShow is also abusing its dominant position by imposing unfair and discriminatory conditions on the theatres/multiplexes, like making them sign contracts for sale of 100% tickets on its platform..In response, BookMyShow contended:Showtyme has been launched post filing of the information and is not functional at all. He has alleged violations prematurely i.e. without even waiting for his business to take off and see the effect; Security deposits given to cinema theatres are not for the purpose of securing exclusive arrangements from them; There is enough competition in the market through PayTM, Ticketnew.com, justicket.com, ticket4u.in, physical booking of tickets at the box office and also through multiplexes dedicated websites like that of PVR, INOX, Cinepolis, etc; It facilitates online booking of tickets for many theatres who do not have the infrastructure to develop their own online booking platform. It does not coerce theatres to avail its services through unfair terms in its agreement, and even otherwise, the agreements are of very short duration..While determining the relevant market as 'market for online intermediation services for booking of movie tickets in India,' the Commission noted that the services provided by online platforms for booking of movie tickets cannot be equated to online sites of multiplexes/single screen cinemas or even by the box office.The Commission relied on news reports to note that in January-March 2017, BookMyShow’s share in online booking of movie tickets was 78%, followed by PayTM with a market share of 13%. As per a December 2018 media report, BookMyShow’s market share in movie ticketing was between 70%-75%, as claimed by its founder.Establishing BookMyShow's dominance in the relevant market, the CCI noted,"The ability of BookMyShow to enter into exclusive agreements further corroborates its position of strength and the various provisions in its agreements with cinema theatres/multiplexes, indicate its superior bargaining power in deciding contractual terms. These factors, taken together, prima facie appear to substantiate the dominant position enjoyed by BookMyShow in the relevant market.".After going through the agreements signed with cinemas, the Commission found,"The exclusive and restrictive agreements with single screen cinemas and multiplexes, in conjunction, prima facie appear to have the potential of denying market access to competing platforms and potential entrants. The cinema theatres as well as the cinegoers alike are restricted in their choice of alternate ticketing platforms, during the working of the contracts that BookMyShow has with large number of theatres/multiplex chains."It also noted that in agreements signed with single screen cinemas, BookMyShow has reserved the right of data collection, ownership and storage. On this aspect, the CCI said,"The Commission is of the view that exclusivity relating to data ownership can increase the bargaining power of the platform over time. Data further strengthens and entrenches the network effects limiting inter platform competition. In a dynamic sense, this would imply that BookMyShow would earn monopoly rents, going forward. The aspect of exclusive ownership of and access to data by a dominant intermediary merits investigation.".It thus called for a DG investigation to be made, after which a report is required to be submitted within 60 days..[Read the order]