Luthra wins another case for Multiplexes CCI holds Every exclusive agreement is not per se anti-competitive

Luthra wins another case for Multiplexes CCI holds Every exclusive agreement is not per se anti-competitive

Bar & Bench

Luthra & Luthra Law Offices recently represented Inox Leisure Private Limited (Inox), a company which operates multiplexes across various locations in India before the Competition Commission of India (CCI).

The issue relates to the complaint filed by the Consumers Guidance Society, Vijayawada before the erstwhile Monopolies and Restrictive Trade Practices Commission (MRTPC) against Inox and its supplier Hindustan Coca Cola Beverages Pvt. Ltd. (HCCBPL) alleging that the exclusive supply agreement between the two parties was a restrictive trade practice. The matter was transferred to CCI upon the repeal of the MRTP Act.

The Consumer Society alleged that the exclusive supply agreement between Inox and HCCBPL was in violation of Sections 3 and 4 of the Competition Act, 2002 (the Act) which pertains to anti-competitive agreement and abuse of dominant position. It was further alleged that the parties were abusing their dominant position by indulging in price discrimination by selling products with same quality, quantity, standards at different prices to different buyers.

The Consumer Society also alleged that there was a foreclosure of the market as Inox was authorized to sell only Coke products reducing the choices for visitors at its theatres.

The Director General, CCI who had investigated the case gave his findings in favour of the Consumer Society.

Luthra along with counsel for HCCBPL strongly opposed the findings of DG. The team of lawyers at Luthra apart from arguing the case on legal grounds also submitted a consumer survey of multiplex visitors to determine the relevant market for the purposes of investigation.

CCI gave its order on May 23, 2011 and ruled in favour of Inox. CCI held that the DG’s delineation of the relevant market was incorrect leading to faulty conclusions. The CCI did not find any contravention of Sections 3 and 4 of the Act. The Court held that ‘every exclusive agreement is not per se anti-competitive’. The CCI also observed that the DG had carried out an incorrect assessment of the adverse effect on the market.

Luthra team was led by Partner and Head of Competition Practice G.R. Bhatia along with Senior Associate Ravisekhar Nair and Associates Karan S. Chandhiok, Kanika Chaudhary, Nidhi Singh and Vikram Sobti.

This order of CCI gives a clear signal to the market that every exclusive agreement cannot be looked at as being anti-competitive.

CCI on May 25, 2011 had 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. Luthra & Luthra was representing the multiplex owners in this case.

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