- (1.) BACKGROUND 1.1 A number of cases have been filed under the provisions of section 19(1) (a) of the Competition Act, 2002 (Act) alleging certain anti -competitive acts on the part of Karnataka Film Chamber of Commerce (KFCC) and other film bodies/associations which are associated with the business of film distribution and exhibition in the territories under their control in India. The present order relates to case nos. 25, 41, 45, 47, 48,50,58 and 69 of 2010 in which information has been filed by various Informants against these associations. While in case no. 25, Karnataka Film Chamber of Commerce (KFCC)and Bihar and Jharkhand Motion Pictures Association (BJMPA) are among ten other' respondents, KFCC happens to be the sole respondent in case nos. 41, 45, 47, 48 and BJMPA, the sole respondent in case nos. 50, 58 and 69. 1.2 In all these cases, the basic issues raised by the Informants are common and identical. It has been alleged that these film bodies/associations have indulged in various anti -competitive activities in violation of the provisions of sections 3 and 4 of the Act viz;, asking the producers -distributors to compulsorily register their films with them, forcing them to abide by their unfair and discriminatory rules directing their members not of deal with the non -members, putting restrictions such as limit on the number of cinema theatres for exhibition of films, discriminating non -regional films against the regional films, undue lone holdback period for satellite DTH and other rights in respect of exhibition of films and imposing bans, penalties and giving a call of boycott against those who violate the rule and regulations of the associations. 1.3 In addition to the aforesaid issues, the Informants also pleaded for interim orders under section 33 of the Act in these cases in order to secure release of their films free from any fetters. 1.4 Since the issues in all these eight cases are almost common and identical, the Commission has decided to dispose of these cases in one common order. Background and Profile of the parties 1.5 In India, majority of the films are produced in Hindi language. Tamil, Telegu, Bengali, Kannada and Malayalam are the major languages in which the non -Hindi films are made. The business of film making consists of various stages involving pre -production, production, post -production, distribution and exhibition. The activities pertaining to distribution and exhibition constitute the final end points in the entire value chain of film production and exhibition. A distributor acquires distribution rights from the producer of a film and thereafter recovers his costs from the revenues earned through exhibition of that film. Now -a -days, many producers are also performing the role of distributors, who prefer to distribute their own films. 1.6 For the purposes of assignment of film distribution rights, territory of entire India at present is broadly divided into 12 circuits, in each of these circuits, associations of film distributors and exhibitors have generally been formed either under section 25 of the Companies Act, 1956 or under the Societies Registration Act, 1860. these association regulate the, business of film distribution and exhibition in their area of control and have their own Memorandum and Articles of Association. In addition, rules and regulations to regulate the activities of film distribution and exhibition have also been framed by them. These associations mainly consist of the persons engaged in the business of film distribution and exhibition. However, some of the associations also have the producers as their members. 1.7 A brief profile of such associations who have been named in the eight cases under consideration is given below; Profile of Respondents A) Karnataka Film Chamber of Commerce (OP -1 in case nos. 25 and sole opposite party in case no. 41, 45, 47 and 48) 1.8.1 Karnataka Film Chamber of Commerce (KFCC) is an association of film producers, distributors and theatre owners which regulates the production, distribution and exhibition of Kannada and non -Kannada films in the territory of Mysore and most of the other parts of Karnataka. The association is registered under Karnataka Societies Registration Act and is having about 5000 members as on date. B) Eastern India Motion Picture Association (OP -2 in case no. 25) 1.8.2 Eastern India Motion Picture Association (EIMPA) was formed in 1945 and is registered under Companies Act, 1956. It has four classes of members -Producers, Distributors, Exhibitors and Associate Members and regulates the territories of West Bengal, Assam and North East States. C) Central Circuit Cine Association (OP -3, 4 and 5 in case no. 25) 1.8.3 Central Circuit Cine Association (CCCA) was formed in 1952 and is registered under section 25 of the Companies Act. It is the representative organization of the film distributors and exhibitors from the State of Maharashtra, State of Chhattisgarh, Madhya Pradesh and Rajasthan (Vidarbha &Khandesh Regions). D) Telangana Film Chamber of Commerce (Hyderabad Film Chamber of Commerce) (OP -6 in case no. 25) 1.8.4 Telangana Film Chamber of Commerce (TFCC) (earlier The Hyderabad State Film Chamber of Commerce), Secunderabad was established in the year 1941, under the Societies Registration Act of 1860. The membership of the chamber comprises of producers (Telugu and Hindi), distributors (Telugu and Hindi) and all exhibitors. All leading producers of Bombay Hindi Film Industry are also the members of the chamber. The chamber is having its jurisdiction over Old Nizam Territory, which includes 9 districts of Telangana (Andhra Pradesh), 7 districts of Marathwada and 3 districts of North Karnataka (Gulbarga, Bihar and Raichur). E) Northern India Motion Pictures Association, Jalandhar (OP -7 in case no. 25) 1.8.5 Northern India Motion Pictures Association (NIMPA) is an association of film distributors and exhibitors registered under section 25 of the Companies Act,. 1956. The areas of its operations are Punjab, Haryana, J&K Himachal Pradesh and Union Territory of Chandigarh. F) Motion Pictures Association, Delhi (OP -8 in case no. 25) 1.8.6 Motion Pictures Associations (MPA) is an association registered under section 25 of the Companies Act. It is an association of film distributors and exhibitors for the areas of Delhi and U.P. G) Indian Motion Pictures Distributors Association (OP - 9 in case no. 25 of 2010) 1.8.7 Indian Motion Pictures Distributors Association (IMPDA) regulates the territories of Mumbai circuit, Gujarat, Goa and Maharashtra (except some part under Vidarbha) and parts of Karnataka. H)Bihar and Jharkhand Motion Pictures Association (OP - 10 in case no. 25, the sole Opposite Party in case No. 50,58 and 69) 1.8.8 Bihar and Jharkhand Motion Pictures Association (BJMPA) was formed in 1987 under the Companies Act, 1956 and regulates the territory of Bihar and Jharkhand. I) The Chennai Kanchipuram Thiruvallur District Film Distributors Association (OP -11 in case no. 25) 1.8.9 Chennai Kanchipuram Thiruvallur District Film Distributors Association (CKTDFDA) is a society of film distributors registered with Register of Societies. It regulates the film distribution in the territories of Chennai, Kanchipuram and Thiruvallur districts. There are three other organizations, namely, Film Distributors' Association (FDA). Ernakulam Indian Film Chamber of Commerce and Film Distributor Association Kerala which regulate the activities of film distribution and exhibition in the State of Kerala. South Indian Film Chamber of Commerce also operates in the territory of Tamil Nadu in addition to the State of Kerala. J) Orissa Films Distributors Syndicate (OP -12 in Case No. 25) 1.8.10 The Orissa Film Distribution Syndicate (OFDS) is functioning under Utkal Cine Chamber of Commerce as its distribution section which was registered under Certificate of Registration Act XXI of 1860. There are two more organizations which are operating in the State, namely, Orissa Film Producers Association and Orissa Film Producers Guild Association, where different producers and distributors are the members. Profile of Informant in the Case 1.8.11 The informants who have filed information in these cases are some of the prominent producers, distributors and exhibitors of Indian Film Industry. A brief profile of Informants is brought out in the paras below. Informant in case nos. 25, 45 and 47 1.8.11.1 The Informant in case nos. 25 and 47 is Reliance Big Entertainment Limited, a company incorporated under the Companies Act, 1956. It is part of Reliance Anil Dhirubhai Ambani Group and is active in the business of film production, distribution and exhibition. It is engaged in film production in English, Hindi and several other Indian languages, which it markets and distributes worldwide it has projects with many leading production houses and Indian directors, In case no. 45, the Informant is Reliance Media Works Limited, another member to the Reliance Big Entertainment Group. Reliance Media Works operates Big Cinemas, said to be India's largest cinema chain with over 500 screens spread across India and countries like United States; Malaysia, Nepal and Netherlands. Informants in case nos. 41, 48, 58 and 69 1.8.11.2 The Informant in the case no. 41 is M/s UTV Software Communications Limited, which has recently been acquired by The Walt Disney Company India Pvt. Ltd., a subsidiary of The Walt Disney Company. It is engaged in activity of both production and distribution of movies. The Informant in case no. 48 is FICCI -Multiplex Association of India, of which the multiplexes are the members. Informant in case no. 50 1.8.11.3 The Informant in case no. 50 is Eros International Media Ltd. a company incorporated under Companies Act, 1956, which inter alia carries on the business of production, distribution and exploitation of cinematograph films.
(2.) INFORMATION 2.1 The facts and allegations in the information filed in eight different cases which are being dealt under this order are discussed in brief, as under: Information in case no, 25 filed by Reliance Big Entertainment Limited 2.1.1 The information in case no. 25 was filed on 14.06.2010. The informant has submitted that most of the associations named, as opposite parties in the case make it compulsory for every film distributor become their member or register his film with them, otherwise he is not allowed to distribute his films in the territories which are regulated by the opposite parties. The cinema exhibitors are also threatened and penalized for exhibiting films of such a distributor who is not a member of any of the opposite parties or whose film is not registered with them. Due to this, the cinema exhibitors do not take the risk of exhibiting the film of a distributor who is not a member of these associations. The share of such distributors is also put on hold. 2.1.2 The Informant in order to support its contention on this point has submitted a letter dated 02nd June, 2010 addressed by Eastern India Motion Picture Association to various cinema exhibitors in which it has been stated that since the film "Prince of Persia" was not registered with the said association before its theatrical release, the distributor's share of the said film should be put on hold. 2.1.3 The Informant has submitted that in the respective States, cinemas are regulated through local enactments. For example, cinemas in the state of Karnataka are regulated by Karnataka Cinemas (Regulation) Act. In the said Act, the powers to grant license are with the State Government which does not stipulate bar on any language, if any restriction is to be imposed on an exhibition of a movie, this can only be done by the licensing authority. According to the informant, however, these associations enjoy a position of strength in their territory of operations and by virtue of such position of strength are able to influence the cinema exhibitors in then" favor. 2.1.4 According to the Informant, being 3 producer of a movie, copyright of film lies within its exclusive domain and its right to enter into the contracts with the distributors and exhibitors of cinematograph films cannot be restricted in any manner by the associations who have no financial interest in the exhibition of the movie and who do not have any contractual relationship with the producers. 2.1.5 Giving instances of discrimination against non -regional films in terms of restriction on number of cinemas for screening of non -regional films, the Informant has submitted that KFCC has issued a directive to the effect that a non -Kannada film can be released only in 21 cinemas (17 in Bangalore city and 4 in district headquarters) as opposed to a Kannada film which can be released in 200 cinemas in Karnataka. Alternatively, a non -Kannada film can be released in all cinemas in Karnataka provided it is released two weeks after its release in other film territories. KFCC has also imposed a restriction on number of prints in relation to non -Kannada films. It has been alleged that similar restriction is sought to be imposed by the Film Distributors Association, Kerala, by declaring not to give permission to the movies of any other languages except for Malaya lam to be released in Kerala simultaneously with all Indian releases with effect from May 1, 2010. 2.1.6 According to informant, the directive to release the non -Kannada films in limited cinemas has an adverse impact on the proceeds out of the exploitation of the non -Kannada films in the territories regulated by KFCC. Similarly, if a non -Kannada film is permitted to be released in Karnataka two weeks after its release in the other film territories, it will go against the interest of the producer/distributor since the curiosity to watch the film will not be the same after two weeks of release. 2.1.7 The Informant has further submitted that the Hindi Language "Kites" which was distributed worldwide by it, was intended to be released in 46 screens in Karnataka as against the directives of KFCC which permitted a non -Kannada film to be released on 21 cinemas only. Consequently, KFCC issued instructions to all cinema theatre owners not to screen the said film. Most of the exhibitors agreed to follow the directives of KFCC. The Informant also submitted various press articles to support its contention. A copy of letter dated 17th May, 2010 addressed by the Informant to KFCC requesting it to permit the Informant to release the film 'Kites' in additional five theatres in Mysore circuit and letters dated 21st May, 2010 and 22nd May, 2010 addressed to KFCC agreeing not to exhibit the film in the additional theatres but only in the theatres permitted by KFCC had also been submitted. 2.1.8 According to Informant, it was forced to comply with the directives of KFCC and it was able to screen its film only in 24 theatres in Karnataka - 17 screens in Bangalore, 4 in rest of the state and in 3 new multiplexes. In support of its contention, copies of letters dated 28th May, 2010 and 24th November, 2009 addressed by KFCC to various cinema exhibitors indicating that the Executive Committee of KFCC has decided to allow non -Kannada films to release in 24 screens instead of 21 screens if the film distributors adhere to the stipulations in the said letter, have also been submitted by the Informant. 2.1.9 As per Informant, restrictions imposed on its film had a large adverse impact on the revenues arising from exploitation of the film "Kites' in Karnataka. Due to such restrictions, the Informant had to suffer a loss to the extent of Rs. 2.30 crore. 2.1.10 The Informant has further submitted that Film and Television Producers Guild of India Ltd. by their letter dated 04th June 2012 requested KFCC to revoke its decision of imposing restrictions on non -Kannada films. However, there was no response to the said letter by the association. 2.1.11 The Informant has also stated that the associations impose unfair holdback restrictions for exploitation of Satellite, Video, DTH and other rights of a film for a certain period from the date of theatrical release of the film. These associations compel a distributor to accept the holdback restrictions -by executing an undertaking to this effect as a condition to the membership. For instance, Central Circuit Cine Association, Bhusawal imposes a restriction through its membership form that a film distributor would not exhibit or exploit his/her film through the medium of Video, Cable TV, Satellite or any other network through VCD, DVD or through any other form for a period of one year from the date of theatrical release in India and in the event the distributor would breach this condition, he/she would be compelled to distribute amongst the distributors, 50% of the income/realizations on the basis of prevalent realizable ratio in accordance with the agreement between A.I.F.P.C Mumbai, F.M.C. Mumbai and CCCA Bhusawal dated 16th June, 2010. A copy of the membership form of Central Circuit Cine Association, Bhusawal and circular dated 21st June, 2000 regarding the arrangement arrived, at between A.I.F.P.C. Mumbai, F.M.C. Mumbai and CCCA Bhusawal has also been Submitted by the Informant 2.1.12 According to the Informant, these restrictions imposed by the associations put the distributors to loss, since at present revenues arising from exhibition of films in theatres are not sufficient to recoup the distributor's costs, particularly when 3 film does nor perform well in theatres and in such a scenario, Satellite, Video, Cable, DTH and other non -theatre platforms have become large source of revenues for the distributors. 2.1.13 The Informant has submitted that a holdback period of 45 -60 days from the date of theatrical release of a film is reasonable and sufficient, considering the fact that a film normally does not run in theatres beyond this period. However, a holdback period of 6 months or one year prevents a distributor from recovering his costs and causes significant losses to the distributor, since if the exploitation of film over other platforms is deferred for such an unjustified period, the film would lose its commercial value. 2.1.14 According to Informant, by imposing unfair and unjustified restrictions, the associations have curtailed the Informant's right to free trade and profession and thereby violated the fundamental right of the Informant to carry on their trade and profession. 2.1.15 In order to buttress its arguments, the Informant has brought out that the courts have severely discouraged the discrimination against Hindi films versus regional films as for instance in the year 2007, in the case of Aashirwad Films vs. Union of India, the Supreme Court struck down the Andhra Pradesh Tax Act as being discriminatory against non -Telugu films vis -a -vis the Telegu films by imposing a higher entertainment tax on non -Telugu films, in 2009, in another writ petition filed by Aashirwad Films, the Supreme Court issued notices to 14 State Governments who have allegedly been discriminating between films on the basis of language while 'levying entertainment tax Further, in the case of Mehboob Productions vs. Motion Picture Associations the Delhi High Court observed that if there is an abuse of monopoly power by a trade body the court is not powerless to circumscribe the unfettered right of an association to exclude a person from the membership of the association. 2.1.16 On the basis of above, it has been submitted by the Informant that the opposite parties by virtue of their position of strength are abusing their dominant position and are able to compel the distributors to become their members and be obliged to abide by their unfair and discriminatory restrictions imposed by them which is prohibited under Section 4(2)(a) of the Act. Further, by imposing restrictions such as limit on the number of cinema theatres for exploitation, banning of films, undue long hold back period for satellite, DTH and other rights the associations are engaged in denial of market access. It has also been alleged that the opposite parties have contravened Section 4(2)(e) of the Act by discriminating against the non -regional films by unduly protecting the regional films. 2.1.17 The informant also filed an application for interim order in case no. 25 apprehending that the discriminatory treatment of the associations including regulations of holdback period for exploitation of Satellite, DTH and Video Rights etc. would continue in relation to the films proposed to be released by the informant in future including the film "Raavan" starring Abhishek Bachchan and Aishwarya Rai Bachchan scheduled to release in Hindi and Tamil language simultaneously on 18th June, 2010. 2.1.18 According to the Informant, both these films were different movies altogether with different star cast. There were two different negatives for each version of the film and there were two individual censor certificates for both versions. However, KFCC treated it as one film. The Informant vide its letter dated 31st May, 2010 requested KFCC to give permission to release both versions of the said film simultaneously in two different chain of theatres with a common multiplex chain. However, KFCC did not agree to the same. A copy of letter dated 31st May, 2010 addressed by the Informant to KFCC was also submitted with the information. 2.1.19 The Informant in its prayer for interim order submitted that the Commission might pass an ex -parte and interim order under Section 33 of the Act, restraining the opposite parties from imposing any restrictions in relation to release and exploitation of the Informant's film "Raavan" until inquiry was completed and final orders were passed. 2.1.20 The Informant in its further reply dated 17.06.2010 also brought out that it had filed a writ petition being Writ Petition (Civil) No.4227 of 2010 before the Hon'ble High Court of Delhi on 15.6.2010 for interim relief till the matter was heard by the Commission. The Hon'ble Delhi High Court on 16.6.2010 after hearing the Informant's counsels, passed the order that petitioner might approach the Commission on 16.06.2010 itself for listing of the case for hearing of interim application. The Informant also brought out the following in order to press for interim order; i) The Informant received an e -mail from PVR Cinemas dated 15.6.2010 in which they stated that KFCC was conducting a general Meeting on 16.6.2010 at 12.00 noon and that KFCC will ask all exhibitors to boycott the release of the film Raavan. ii) The Informant was also informed by various exhibitors that KFCC had in its meeting held on 16.06.2010 told all the exhibitors to submit declarations that they would not exhibit the film 'Raavan' or any other film produced by the Informant. In this regard a copy of the e -mail dated 16.6.2010 received by the Informant's office recording the developments transpired in the said meeting was also enclosed. 2.1.21 According to Informant, from the aforesaid e -mail, it was clear that KFCC had banned 'Raavan' and 'Raavanan' and requested all exhibitors to comply with the same. In these circumstances, the Commission may restrain KFCC from abusing their dominant position as prohibited by Section 4 of the Act and restrain from restricting any exhibitors to exhibit the films 'Raavan' and 'Raavanan' in the State of Karnataka until further orders of the Commission and be restrained from giving effect to letter dated 28.5.2010 and imposing upon any exhibitors ban on the said films. 2.1.22 The informant also brought out that KFCC was indulging in per -se illegal activities of boycott of the Informant's movie starting with the movie 'Raavan' in complete defiance of the Competition Act. According to the Informant, the movie was slated for an All India release on 18.6.2010, but KFCC had created artificial boycott of the movie in the State of Karnataka since the informant had. filed the present information before the Commission and had also filed a writ petition before the Hon'ble High Court. In these circumstances, the informant pleaded that urgent interim orders/ were, required before Information in case no. 45 of 2010 by Reliance Media Works Limited 2.1.23 Information in case no. 45 was filed on 19.08.2011 by Reliance Media Works Limited (Reliance Media), another group concern of Reliance Big Entertainment group, stating that KFCC had issued letter dated 02.08.2010 to various Kannada film distributors directing them not to supply the Kannada films to the Reliance Media for exhibition in its cinema halls which are run in the name of "Big Cinemas" because Reliance Big Entertainment Ltd, had filed a complaint before the Commission with regard to the distribution of film "Raavan" and the Commission was pleased to grant the interim relief to the group company of the Reliance Media. A copy of the letter dated 2nd August, 2010 sent by KFCC to one of the Kannada Film distributors, M/s Pal Enterprises was also submitted along with information. 2.1.24 It was also alleged that KFCC had also issued circular dated 07.08.2010 in local newspapers in Karnataka, calling upon all distributors, producers and exhibitors not to support the Big Cinema and other related group companies of Big Cinema by not providing Kannada and non Kannada films and also not to carry any cinema related transaction with them. KFCC had also asked its members vide letters dated 14.08.2010 to withhold the share amount and seize the prints from Big Cinemas. In order to substantiate its contention, the Informant has also submitted letters sent by KFCC to M/s Pal Enterprises and M/s Rex Enterprises on the issue. 2.1.25 The Informant also brought out that on 17th August. 2012 KFCC called upon all the music composers and other film) personalities in Karnataka not to attend the Karnataka Music awards function to be held on 22nd August, 2010 to be organized by "Big -FM", the radio station owned by the Reliance Group. 2.1.26 According to Informant, the cause of action for filing the information was denial of supply of prints of film 'Lafangey Parindey' to the Reliance Media by the producer namely Yash Raj, because of the fear of KFCC, which enjoys dominant position in the State of Karnataka. The Informant also made an interim prayer for directing the Opposite Party not to impose any restriction in relation to the film "Lafangey Parindey" Films which was scheduled to be released on 20.08.2010 until the conclusion of the inquiry. Information in case no. 47 of 2010 filed by Reliance Big Entertainment Ltd. 2.1.27 In the information in case no. 47 filed on 25.08.2010 by Reliance Big Entertainment Ltd. it was further brought out that since earlier KFCC imposed undue restrictions on the exhibition of the film "Raavana" which were challenged before the Commission, aggrieved by that, the association had adopted, vindictive measures to stop the supply of print of films to the Informant due to which it was not able to exhibit films in the screens in the State of Karnataka. 2.1.28 The Informant has alleged that by stopping the supply of prints and the revenue share to the Informant, KFCC was a busing its dominant position and made a prayer for restraining the Association from imposing restrictions on the distributors to stop supply of prints and share of revenue to it and also from imposing unfair and unjustified restrictions. 2.1.29 The Informant also made an interim prayer for directing KFCC not to impose any restriction in relation to release and exploitation of any film of Informant including the film "Aashayein" which was scheduled to release on 27.08.2010 until the conclusion of the inquiry. Information in case no. 41 filed by UTV Software Communications Limited 2.1.30 Information in case no. 41 was filed on 10.08.2010 by UTV Software Communications Limited. It was alleged as in the cases of information filed by the Reliance group that KFCC makes it compulsory for every film distributor and/or exhibitor to become their member and/or register his film with the association. A distributor who refuses to become a member of the association and/or refuses to register his film is not allowed to distribute or even release his/ its film in the territory which is governed/ regulated by KFCC. The distributor is also not permitted to supply its film to an exhibitor who is not registered with KFCC. In the event the exhibitor exhibits the film of distributor who is not a member or the distributor supplies its film to an exhibitor who is not a member, such exhibitor who exhibits the film of or distributor who supplies to a non member is financially penalized by KFCC. 2.1.31 According to Informant, KFCC enforces such compulsions on distributors by threatening cinema exhibitors/theatre owners of serious consequences for exhibiting films of a distributor who is not its member or whose film in not registered with it. On account of such threats, the cinema exhibitors/theatre owners who are either members or neutral parties are unwilling to undertake the risk of exhibiting the film of a distributor who is not a member of the association/ whose film is not registered with it. Therefore, the Informant is required to register with KFCC failing which its films will not be exhibited in the State of Karnataka. 2.1.32 The lnformant in this case like in information filed by Reliance group in other cases also alleged that KFCC had issued a directive imposing restrictions on number of screens in which a non Kannada film can be released, in 13 single screens and 7 multiplexes in Karnataka (20 in Bangalore city and 4 in district headquarters) as opposed to a Kannada film which can be released in 200 cinemas in Karnataka. Further, in multiplexes the films are to be screened in only one screen and only 5 shows can be accommodated in a day. A non -Kannada film can be released in all cinemas in Karnataka provided it is released 2 (two) weeks after release in other film territories. 2.1.33 According to the Informant, in furtherance of the said norms and directives, by and under letter dated July 23, 2010 addressed to all the multiplexes in Bangalore, KFCC illegally called upon the exhibitors/theatre owners to withhold the share amount in respect of the film, "I Hate Luv Storys" (co -produced by the informant with Dharma Productions) and Knight and Day, an English language film, until further notice, as the distributors of these films had violated the norms of KFCC. According 10 the informant, it had invested huge sums of money in the film "I Hate Luv Storys" and was and was entitled to recover the same by exploiting their copyright in the film and therefore, KFCC could not have illegally withheld the due payments. 2.1.34 The Informant further submitted that the act of KFCC calling upon the multiplex owners to withhold payments to the distributors on the ground of alleged violation of the norms of KFCC was illegal. The said letter dated July 23, 2010 was grossly arbitrary and in abuse of the dominant position enjoyed by KFCC to unlawfully gain from the film of the Informant and to arm twist the Informant into adhering to its illegal directives. 2.1.35 The Informant also brought out that the malafide purpose of KFCC in threatening cinema exhibitors/theatre owners of dire consequences such as not being able to get any language film for screening in future if directives of KFCC as regards limit on number of screens for non -Kannada films are not followed is clearly to discriminate against non -regional films and to impose unfair restrictions on the film distributors which is prohibited by the Competition Act, 2002. By restricting the number of screens that may be engaged to exhibit a non Kannada film in Karnataka, KFCC is unlawfully imposing a limit on the supply of a film in the market. The informant has alleged that decision of KFCC to impose such unlawful conditions as recorded in the said letter dated June 18, 2010 is anti competitive and in blatant violation of section 3(3) of the Competition Act, 2002. 2.1.36 The informant also has alleged that by the impugned action of KFCC, the Informant's fundamental right to free trade and profession has been limited and restricted which is prohibited by Section 4(2)(a) of the Act. The consequence of impugned action of KFCC is also denial of market access to the distributors under Section 4(2)(c) by imposing restrictions such as limit on number of cinema theatres for exploitation, banning of films. Further, KFCC have contravened Section 4(2) (e) by abusing their dominant position to discriminate against the non -regional films by unduly protecting the regional films. 2.1.37 The Informant also submitted that it had numerous films slated for release which it either is co -producing, distributing or has an arrangement to distribute and apprehends that in the event the aforesaid restrictions and conditions are imposed on the future films also, grave prejudice and loss shall be caused to the Informant. With respect to the film "Peepli Live", which was due for release on August 13, 2010, the Informant apprehended that irreparable loss and injury shall be caused to the Informant in the event the norms/restrictions as set out in the said letter dated June 18, 2010 were illegally imposed by KFCC on this film also. 2.1.38 According to the Informant, the Commission in the matter of Reliance Big Entertainment Ltd. vs. KFCC and Others had passed interim order dated June 23, 2010 restraining KFCC from taking any action direct or indirect, to prevent any exhibitors/theatre owner from exhibiting the film "Raavan" or' "Ravanan" in the State of Karnataka. The Informant prayed that accordingly interim relief of stay of the said 'letter dated July 23, 2010 issued by KFCC in respect of the film "I Hate Luv Storys" also might be granted. Apprehending that the norms/restrictions as set out in the said letter dated June 18, 2010 shall be applied by KFCC to its film "Peepli Live" also, which for release on August 13, 2010, the informant prayed that the Commission might pass an urgent ex -parte ad interim order under Section 33 of the Competitive Act, 2002 restraining KFCC from implementing and/or acting in furtherance of the said letter dated June 18, 2010 or July 23, 2010 and/or the Commission might grant a stay against the implementation of letter dated July 23, 2010 and also from imposing any restriction on exhibition of films to be released namely Peepli Live, We are family, Paan Singh Tom or, Guzaarish, No One Killed Jessica, Tees Mar Khan, Saat Khoon Maaf, Thank you and Chillor Party, My friend Pinto, Dhobi Ghat or such other films that may be released from time to time by the Informant. 2.1.39 The Informant also prayed that the operation and implementation of letters dated June' 18, 2010 and July 23, 2010 be stayed in interim and be quashed and set aside finally and KFCC be restrained and be ordered to cease and desist from making any discrimination between regional and non regional films and/or imposing any restrictions on the Informant which are discriminatory against non regional films. Further, KFCC be also restrained from imposing any unfair and unjustified restrictions on release and exploitation of Informant's films which impair the fundamental right of the free trade and profession. Information in case no. 48 of 2010 filed by FICCI Multiplex Association of India 2.1.40 The information in the case no. 48 was filed 30.08.2010 by FICCI Multiplex Association of India on behalf of multiple owners who are the members of the Informant. 2.1.41 The Informant on the lines of information filed by Reliance group of companies in case nos. 25, 45 and 47 in the instant case also alleged that KFCC has abused its position of dominant in terms of imposition of unfair and discriminatory conditions in relation to release of non -regional movies in the state of Karnataka on the basis of language by issuing circulars, notices, oral and written to the cinema owners not to accept non -regional films for exhibition since the same is not in Kannada, or to exhibit them in a particular manner only. According to the Informant, restrictions imposed by KFCC are (i) anti -competitive, (ii) unfairly favors Kannada film producers and discriminates against non Kannada film producers;(iii) blacklists any member without any relevant legal cause; (iv) imposes arbitrary conditions and restrictions pertaining to the exhibition of a non Kannada film; and (v) prejudicial to consumer interest at large. Taken together, these factors are detrimental to the overall film industry of the country. 2.1.42 Further, the distributors of regional (Kannada) films have acted together in violation of Sections 3(3) of the Competition Act,. 2002, as a result of which the distributors of regional films, who as members of the KFCC, jointly, in accordance with the restrictions imposed by the association, do not release non -regional films in the territory of Karnataka, or release them subject to such illegal restrictions as imposed by the association. It has been alleged that this act in concert on part of regional distributors not only results in limiting the market by and disrupting the free and fair trade for the release non -regional films but in turn, has a direct impact of depriving the consumers of viable options as a source of entertainment. 2.1.43 The lnformant also brought out on the lines of information in other cases that KFCC, as per its policies which are illustrated in its letters dated August 14, 2010, makes it compulsory for every film distributor in the territory to become its member and/or register his film with it. A distributor who refuses to become a member and/or refuses to register his film with them is not allowed to distribute his film in the territory governed by KFCC. Similarly, an exhibitor who is not registered as a member with the KFCC is forbidden from exhibiting any film in the state of Karnataka. 2.1.44 The Informant has drawn attention towards the fact that in May 2010, KFCC had imposed certain unfair and illegal terms on the owners of Multiplex Cinema Halls in Karnataka thereby preventing them from exhibiting the Hindi language film 'KITES' in any theatre except those permitted by them (the KFCC). Members of the Informant were forced to accept this unfair and discriminatory condition at the cost of huge financial loss fearing the risk of boycott. Further, on May 28, 2010, KFCC vide a Notice to distributors instructed them to allow the members of the Informant to release non -regional films only in 24 theatres in the State of Karnataka, i.e., 13 single screens + 7 Multiplexes in Bangalore city and 4 theatres outside Bangalore city. The distributors were directed not to violate the said Notice under any circumstances and were asked to furnish the details of theatres (with names) in which these non -regional films would be released well in advance. - 2.1.45 The Informant has further brought out that on July 8 2010 KFCC issued another Notice to the owners of Multiplex Cinema Halls in the city of Bangalore and directed them to implement the unfair and discriminatory conditions mentioned below: i. First preference shall be given to Kannada films in Multiplex Cinema Halls and they shall be exhibited compulsorily. ii. Owners of Multiplex Cinema Halls shall continue to exhibit the Kannada film till the collection towards the same are good. iii. Kannada movie shall not be removed from the Multiplex Cinema Halls without bringing it to the notice of the concerned producer and distributor. iv. One film shall be restricted to one screen only. 2.1.46 The Informant has further stated that despite the institution of an inquiry by the Commission into alleged abuse of dominant position by KFCC in the case of information filed by Reliance Big Entertainment Limited in relation to the release of the Hindi movie 'Raavan' or Ravanan' in the cinema halls in Karnataka, KFCC on July 22, 2010, once again issued a letter to the owners of multiplex cinema halls in Karnataka instructing them to release the Hindi language film 'KHATTA MEETHA' as per the norms of association's letter dated May 28, 2010 by virtue of the said film being a non -regional film. Further to the above direction, KFCC also issued verbal directions to distributors of the English language film "SALT" and Hindi language film "KHATTA MEETHA" to strictly adhere to the restrictions set out in the KFCC letter dated 28, 2010. Following these verbal directions, the distributors of Hindi language, film "KHATTA MEETHA" were constrained to release the said film. In accordance with the restrictions imposed by KFCC. 2.1.47 According to the Informant, these are clear evidences of the fact that despite the orders of the Commission, KFCC failed to act upon the Interim order dated June 17, 2010 and has till date continued with the unfair and discriminatory restrictions imposed on exhibition of non -regional films in the State of Karnataka. Subsequently, on August 2, 2010, KFCC issued another notice to all its members directing them to stop the supply of Kannada films to Reliance Big cinemas (one of the Multiplex operators in Karnataka and a member of the Informant). KFCC directed the blacklisting of Reliance Big on the pretext of "some controversy" between KFCC and Reliance Big and instructed the distributors not to supply them Kannada films until they receive further directions from KFCC. 2.1.48 The Informant has further submitted that on August 4, 2010, in yet another blatant attempt at subverting the authority of the Commission, KFCC issued another notice to all the multiplexes in Bangalore asking them to withhold the share amount in the movies ' I HATE LOVE STORY' and 'KNIGHT AND DAY' on the ground that the Producer/Distributors had. allegedly violated the norms of KFCC while releasing the films. On August 6, 2010, KFCC issued another Notice to the distributors, instructing them not to release the English language film 'EXPENDABLES' in Big Cinemas in the State of Karnataka on account of "a controversy" between KFCC and Reliance Big Which was not disclosed in the notice. 2.1.49 The informant further submitted that threats of boycott for not following the dictates of the association provides an impetus for the regional distributors not to release their films in multiplex cinema halls the State of Karnataka in contravention of the directions of KFCC, Which is a clear violation of the provisions under Section 3 (3) of the Competition Act, 2002. 2.1.50 The Informant also submitted that the unfair and discriminatory restrictions being imposed by KFCC upon the distributors of non -regional films in Karnataka is directly impeding the ability of multiplex operators to screen popular films and is violative of Section 4 of the Act. 2.1.51 According to the Informant, in spite of the Order of the Commission dated June 17, 2010 and also June 23, 2010, in case of Reliance Big Entertainment (case of Ravan and Ravanan), KFCC had indulged in similar activities and imposed similar restrictions on distributors and multiplex owners, which was unfair and unjustified and amounts to a violation of the said orders, in direct contravention of the provisions of the Competition Act, 2002. The Informant expressed his apprehensions that unless restrained, KFCC would continue to impose similar restrictions on distributors and multiplex operators in future. 2.1.52 Along with the information, therefore, the Informant also filed an application for interim order under Section 33 of the Act restraining KFCC from putting any direct or indirect restrictions on the release of non -regional films until the conclusion of an inquiry or until further orders. Information in case no. 50 of 2010 filed by Eros international Media Ltd. against BJMPA 2.1.53 The information in case no. 50 was filed on 03.09.2010 by Eros International Media Ltd. alleging certain anti -competitive acts and conduct against Bihar & Jharkhand Motion Pictures Association (BJMPA) 2.1.54 It has been alleged that members of the association are prohibited from dealing with the persons engaged in the exhibition and distribution of the films who are not its members or an association recognized by it. The Informant has alleged that BJMPA and its members have a coercive mechanism for ensuring the compliance of such anti -competitive agreements between themselves. Any member who violates the terms of the agreements or acts contrary to the circulars and directives of BJMPA is isolated or blacklisted by it. The Informant has also alleged that the membership of or recognition by BJMPA is an essential precondition for doing business of film distribution and exhibition in the territory of Bihar and Jharkhand. 2.1.55 It has been alleged that the Informant had acquired all rights of a cinematographic film titled "Housefull" and was approached by a proprietary concern Ms. Shree Shreshtha Films who is the member of BJMPA for acquisition of a license to distribute, exhibit and exploit the film in the territory of Bihar and Jharkhand. The Informant and Shree Shreshtha Films, out of free will and consent entered into the Distribution Agreement dated 27''' April, 2010 for licensing the theatrical rights of the said film. As condition precedent to distribute, exhibit and exploit the films in the territory of Bihar and jharkhand, the producer, distributor and sub -distributor of the film is compelled to register the film and execute agreements, documents, declaration and undertaking with BJMPA in absence whereof the association and its members including all the theatre owners in the territory of Bihar and Jharkhand cannot and do not exhibit the film. 2.1.56 Accordingly, M/S Shree Shreshtha Films requested the Informant to sign and execute documents for registration of the film with BJMPA which included declaration, undertaking, affidavit, power of attorney and submission of Producers/Distributors Joint application/agreement in respect of the above film. As the declarations and undertakings and documents contained terms and conditions which were contrary to and inconsistent with the Agreement dated 27th April, 2010, the Informant was reluctant to sign and execute the same. 2.1.57 However, in view of the fact that in the absence of registration of the film, the film would not be exhibited or released in the territory of Bihar and Jharkhand, the Informant had no other option but to sign and execute the undertaking, declaration, affidavit and power of attorney required for the release of the film in the territory of Bihar and Jharkhand. 2.1.58 The Informant has submitted that aforesaid agreement, documents, declaration and undertaking have the effect of (i) controlling, limiting, restricting and otherwise withholding the distribution, supply of the cinematograph films, (ii) imposes supplementary obligations on the producer and/ or distributor which supplementary obligation comprises inter -alia of (a) curbs and restrictions on the broadcasting and telecasting the film via Satellite for a period of 5 years, (b) adherence to the rules and circulars issued by BJMPA, (c)acceptance of BJMPA as the Arbitrator in the event of dispute between the producer/Distributor/Sub -distributor regardless of the Agreement to the contrary etc and (iii) makes performance of the agreement between the producer and distributor or distributor and sub -distributor subject to acceptance of various unfair and discriminatory conditions declaration; undertaking and documents. 2.1.59 According to Informant, based on such declarations and undertakings and documents, BJMPA initially issues a letter to show -cause why action should not be taken and penalty imposed for alleged unauthorized screening of the film through satellite channel, failing which action would be taken including penalty and imposition of ban from dealing with any member. Thereafter BJMPA after considering the show cause notice by letter imposes a penalty for the purported illegal telecast of satellite rights. 2.1.60 The Informant has brought out that BJMPA had imposed penalties upon the Informant such as by letter dated 12.10.2009 a penalty of Rs. 4, 00,000/ -was imposed on Informant for telecasting the film 'Heros' on satellite channels. Since, the Informant did not pay the penalty imposed by BJMPA therefore, a caution/Circular dated 31.10.2009 was issued by BJMPA cautioning all its distributor members not to deal with informant, identical show cause letters dated 27.06.2008, 30.06.2008, 11.08.2008, 28.01.2009 and 17.02.2009; orders imposing penalty dated 26.02.2008, 09.09.2008, 05.03.2009; and caution/circulars dated 30.04.2008, 28.02.2009, 31.10.2009, were issued and passed against the Informant in respect of some other films. Further, BJMPA in respect of the film "Veer", "Paathshala" and "Houseful" issued show cause notices dated 10.08.2010, to show case "why penalty should not be imposed" failing which BJMPA threatened to ban the Informant from dealing with its members. 2.1.61 According to the Informant; certain penalties were paid by the Informant either directly to BJMPA or distributor/sub -distributor, which were imposed upon certain films exhibited by it on the television and satellite because of the apprehension of harm which could have been accrued due to the non -release and exhibition of the upcoming films in the territory of the Bihar and Jharkhand. According to the informant, in last three years, a sum of Rs. 21 Lakhs has been collected by BJMPA from it. 2.1.62 The Informant also submitted that it had reason to believe that in case of the film "Veer", Paathshaala" and "Housefull" BJMPA, will on the failure of the Informant to pay the penalty, impose a ban from dealing with its members consequent to which the informant would be disabled and prevented from distributing and exhibiting the forthcoming Hindi cinematograph film "Anjaana Anjaani" scheduled to be released inter alia in the territory of Bihar and Jharkhand on 24.09.2010 2.1.63 The Informant has alleged that BJMPA is in a position of dominance and by virtue of its position of strength is able to compel the distributors to become its members and be obliged to abide by the unfair and discriminatory restrictions imposed by it against its members in order to fulfill the demands of its members. It has also been alleged by the Informant that the impugned action of the BJMPA also amounts to denial of market access to the Informant. Information in case no. 58 filed by UTV Software Communications Limited against BJMPA 2.1.64 Another information against BJMPA was filed in case no. 58 by UTV Software Communications Limited on 27.10.2010. 2.1.65 It was alleged in the information on the lines of information filed in case no. 50 that BJMPA through the agreements which are reflected in its Memorandum and Articles of Association, mandates its members not to deal with or to do business with (i) persons engaged in the exhibition and distribution of films who are barred (put on caution list) by the association or (ii) persons who are not its members. The Informant has alleged that all these activities, agreements understandings and arrangements between the members of the association are actions in concert, and attract the provisions of the Competition Act. 2.1.66 According to the Informant, explicit agreements between the members of BJMPA are reflected in the Memorandum of Association, Articles of Association and Rules and Regulations including "Rules for Registration of a Picture" and "Rules for Prevention of Unauthorized Production, Exploitation and/or Exhibition of Films". BJMPA by these rules and regulations and the agreements as reflected in the Memorandum and Articles of Association as also decisions and actions taken in the course, limit, control and restrict the distribution, exhibition and exploitation of films in the territory. 2.1.67 The Informant has alleged that Rules 5 & 8 of the association make it mandatory for every film producer to be a member of the association to register their film with the association by entering into and submitting a document titled Producers, Distributors Joint Application/Agreement ("hereinafter referred to as "Agreement") with annexes thereto being forms of a Declaration and Undertaking by the Producer and Distributor, a Power of Attorney of the Producer, and a draft Affidavit of the Producer and Copyright Holder, if the producer is desirous of licensing its film for distribution to any, distributor registered with the association. The said annexes to the Agreement provide for unreasonably long holdback periods of six months for cable TV, CD, Video and disc rights and a holdback period of five years before satellite exhibition of the film from the date of premier release of the film in India. 2.1.68 Further, the Articles of Association also provide for suspension of membership in the event a member deals with a non -member contrary to the Articles of Association and the rules framed by the association. In the event the distributor/sub -distributor/theatre owners/exhibitors enters into an agreement for distribution of a film with a producer who is not a member of the association of who does not register his film with the association or who is put on caution list (black list) such distributor/sub -distributor theatre owners/exhibitors is financially penalized by the association and his membership is also liable to be terminated. 2.1.69 On account of such threats, the exhibitors/theatre owners/distributors who are either members or neutral parties, are unwilling to undertake the risk of exhibiting the film of a producer who is not a member of the association or whose film is not registered with the association or who is put on the caution list or black list. It has been alleged that as a result of the dominant position enjoyed by the association in the territory, a producer who refused to become a member of the association or refuses to register his film with the association is not allowed to distribute or even release his film in the Territory. 2.1.70 In view of the existing rules and regulations, the Informant is left with no option but to be a member of the association and in view of the dominant position of the association in the Territory, the Informant is forced to register its films with the association before release in the Territory, and enter into the Agreement, and have the same submitted to the association. 2.1.71 The Informant has alleged that the association has also started asking for copies of contracts that are signed between the relevant parties as opposed to earlier, when they only required submission of a signed undertaking to ascertain whether it is Minimum Guarantee or a commission contract and then it unlawfully interferes in the transactions and contracts between producers/ distributors/ exhibitors and impose conditions upon the distributors and exhibitors over and above the commercial understanding arrived at between the producer and distributor and/or distributor and exhibitor. 2.1.72 According to the informant, around September 1, 2010, it received a copy of a caution list dated September 1, 2010 issued by the association from its distributor M/s. Aum Moviez, who had distributed the film "We Are Family" of which the title holder was the Informant. The said caution list included the name of the Informant also. The Informant immediately addressed a letter dated September 3, 2010 to the association enclosing a copy of the said caution list calling upon the association to explain why the caution list had been issued and the grounds for the inclusion of the name of the Informant in the caution list. 2.1.73 The Informant further called upon the association to explain the urgency behind the issuance of the caution list by the association when the association was aware that the Informant's film "We Are Family" was scheduled for release on September 3, 2010. However, as on date of filing the information, the Informant did not receive a reply to the said letter dated September 3, 2010. However, since the film was released, the matter was therefore not pursued. 2.1.74 According to the Informant, thereafter, the Informant came across a caution list published by the association Respondent in the fortnightly B & J.MP.A Film Bulletin i.e. Vol. XXI No. 11 published on 15th September, 2010, wherein the name of Mr. Ronnie Screwvala, the Managing Director of the Informant, had been published and a penalty of Rs. 5,00,000/ - Rupees Five Lac only) was purportedly imposed on the Informant for satellite exhibition of the film "Kurbaan" on Satellite channels. The said caution list also warned all the members of the association not to deal with the Informant. 2.1.75 The Informant has stated that background of this caution list was the fact that the theatrical rights of the said Film were licensed by the informant (title holder) to one Kapurchand Private Limited, a member of the association, for distribution in the said Territory on a commission basis. The film was theatrically released in the Territory on 20th November, 2009 and the film was first aired on "Colors" satellite channel on 21st February, 2010 i.e. less than five years after Premier Release in India. The association appears to have published the said caution list in view of this so called breach of condition, ignoring the fact that this was an agreement between the Informant and Kapurchand, that was submitted to the association and to which the association was not a party. 2.1.76 According to the Informant, the cause of action for breach of the Agreement, and consequent losses, if any, which would have been suffered on account of "early" satellite exploitation of the Film, would have been suffered by Kapurchand, and not by the association. Kapurchand had not filed complaints and therefore under no circumstances did the association have any locus stand to raise any claims or penalties against the Informant or intervene in the matter. The Informant called upon the association to withdraw the said caution list by their letter dated October 4, 2010. No reply, however, was received to the letter till the date of filing the information. 2.1.77 According to the Informant, the instant information had been filed to restrain the association from obstructing or interfering with release of forthcoming films of which the Informant is title holder. The Informant expressed its apprehension that unless it paid the so called penalty amount, the association would interfere with distribution of the forthcoming films of the Informant. 2.1.78 The Informant has alleged that any conditions imposed by the association interferes with freedom to contract and/ or is anti -competitive or violative of the rights granted to the Informant under law are illegal and not binding on them in as much as they limit and control the supply of the film in different formats in the market. These conditions are unreasonable in as much as it is not commercially viable for the producers/distributors to adhere to such irrational holdbacks especially in the current market scenario when the demand or marketability of a film after its theatrical release is for a limited period. There will be no market for the films after 5 years of the release of such films and therefore the holdback adversely affects the exploitation of the films. 2.1.79 The Informant has submitted that as a result of the said caution list no distributor/exhibitor in the Territory may deal with the Informant under apprehension of being financially penalized or debarred from the association. The practice followed by the association of issuing such a caution list, so as to impair the business of the producers/distributors is in gross abuse of its' dominant position in the territory under its control. 2.1.80 The Informant also submitted that its next film "Guzaarish" was scheduled for release on November 19, 2010. Since the association had failed and neglected to reply to the letters dated 03.09.2010 and 04.10.2010 addressed by it to the association, the informant expressed its apprehension that unless it paid the penalty amount, the association would interfere with the distribution of the forthcoming films of the Informant. Information in case no. 69 by UTV Software Communications Limited against BJMPA 2.1.81 The information in case no. 69 of 2010 against BJMPA was filed on 16.12.2010. In the said, information giving the background of filing the information it was stated that earlier by way of a information bearing number 58 of 2010, the Informant had alleged restriction and interference by the association in release of forthcoming films and taking cognizance of that the Commission had granted an interim relief to the Petitioner by way of an order dated November 18, 2010. 2.1.82 Since Informant's next film "Tees Maar Khan" was scheduled for release on December 24, 2010, it had thereafter approached the Commission by way of a miscellaneous application dated December 7, 2010, whereby Informant prayed for extension of order dated November 18, 2010 passed in information No. 58/2010 to their forthcoming film "Tees Maar Khan" as well. The Commission after considering the aforesaid application dated December 7, 2010, in its meeting dated December 14, 2010 had observed that the Informant had earlier filed the application under section 33 for release of another film. Therefore fresh application was needed to be filed under the Competition Act for order under section 33 in respect of forthcoming films. 2.1.83 The informant in the instant information on the lines of information in case no. 58 submitted that conditions including those of irrational holdbacks imposed by the association are anti -competitive and are violative of the rights granted to the Informant. Such laws are not binding on the Informant in as much as they limit and control the supply of the film in different formats in the market. 2.1.84 The Informant on the lines of submissions made in case no. 58 also reiterated that the practice followed by the association of issuing such caution lists impair the business of the producers/distributors since as a result of the said caution list no distributor/exhibitor in the Territory/may deal with the Informant under apprehension of being financially penalized or debarred from the association. 2.1.85 The Informant has requested that the caution lists issued against the Informant be quashed and set aside and the association be restrained from imposing any unfair and unjustified restrictions including unreasonable hold back periods and/or from in any manner obstructing, impeding or hindering the exhibition and exploitation of Informant's forthcoming films -Tees Mar Khan, No One Killed Jessica, Saat Khoon Maaf, Thank you and Chillar Party, My friend Pinto, Delhi Belly and Dhobi Ghat and/or in respect of any other films as may be released from time to time which impair the fundamental rights of the Informant of free trade and profession. Proceedings for interim relief and Prima -facie Orders of the Commission After considering the information and having found that a prima facie case exists in all these cases, the Commission passed an order under section 26(1) directing DG to conduct investigation into the matter. Prima facie order and interim order in case no. 25 of 2010 3.1 In case no. 25 of 2010, the Commission passed order dated 17.06.2010 under Section 26(1) of the Act, directing the DG to conduct an investigation in the case. The Commission after considering the information and allegations brought out by the Informant also passed an interim order on 17.06.2010 restraining the OP -1 from taking any action direct or indirect to prevent any exhibitor from exhibiting the film "Raavan" or "Ravanan" in the State of Karnataka, if such exhibitors are willing and desirous to exhibit these films. The interim order initially was to be effective till 22.06.2010 and opportunity was given to both the parties. The Commission after hearing both the parties, later on vide order dated 23.06.2010 continued the interim order beyond 22.06.2010 till further orders. Prima facie order and interim order in case no. 45 of 2010 3.2 In case no. 45 of 2010, order u/s 26(1) was passed on 24.08.2010 under Section 26(1) of the Act, directing the DG to conduct an investigation in the case. Apart from the other reliefs the Reliance Media also requested for an interim order by restraining the KFCC from imposing any restriction in relation to supply of prints of film 'Lafangey Parindey' till the final disposal of the matter. The Reliance Media also requested to restraint the KFCC from passing any such directions in regard to the future films of the Reliance Media till the final disposal of the matter. The matter was considered for interim order on 09.09.2010. The interim order was passed the same day restraining KFCC from taking any action and imposing any restrictions direct or indirect to prevent any producer or distributor in relation to supply of prints -Kannada or non -Kannada to the Informant, if the producers or distributor is willing and desirous to supply the same to the Informant for exhibition in the territory of Karnataka. Prima facie order and interim order in case no. 41 of 2010 3.3 Order under section 26(1) was passed, by the Commission on 26.08.2010 in case no, 41 of 2010 directing the DG to conduct an investigation in the case. However, no interim order was passed in the case since the Commission observed that the film "Peepli Leave" of the Informant was released already on 13.08.2010 and order u/s 33 was passed on 21.09.2010 accordingly. Prima facie order and interim order in Case No. 47 of 2010 3.4 In case no. 47 of 2010, order u/s 26(1) was passed on 26.08.2010 directing the DG to conduct an investigation in the case. As far as prayer for passing interim order under Section 33 of the Act is concerned; the matter was fixed for 7th September, 2010 before the Commission. As the film 'Aashayein' was already released i.e. on 27th August, 2010 therefore it was considered that interim relief asked has become infructuous. The advocate for Informant filed additional submissions along with affidavit on 8th September, 2010 stating that the Informant was apprehending imposition of restrictions on the exhibition of the films of the Informant in near future by the Opposite Party. A list of 20 films without specifying the date of release was also enclosed. The Commission noted that none of 20 aforementioned films was going to be released in the forthcoming week. After considering the additional submissions filed by the informant and oral submissions of advocate for the Informant, the Commission decided not to pass any interim order in the case and not to consider the additional submissions. Prima facie order and interim order in case no. 48 of 2010 3.5 In case no. 48 of 2010, order u/s 26(1) was passed on 07.09.2010 directing the DG to conduct an investigation in the case, in order to argue its case for interim orders, the advocates of the Informant and the Opposite party appeared on 21.09.2010. The counsel of the Informant sought additional time to submit additional facts before the Commission. The Commission granted time for the same till 27.09.2010. The Informants vide letter dated 27.09.2010 submitted additional information. 3.6 According to the Informant, in the facts and circumstances of the case and in the interest of justice, the Commission may pass an order staying the operation of the letters/notices dated May 28, 2010 and July 08, 2010 of KFCC and also restrain the association from imposing any further direct or indirect restrictions on the release of non -regional films until the conclusion of the inquiry by this Hon'ble Commission. 3.7 After considering the submissions of the Informant and the Opposite Party, the Commission passed an order dated 26.10.2010 under Section 33 of the Act, dismissing the prayer of the Informant. The interim relief was found not liable since it was noted that the interim relief prayed for by the Informant was exactly the same which he has sought as final relief. Prima facie order and interim order in Case No. 50 of 2010 3.8 In case no. 50 of 2010, order u/s 26(1) was passed on 16.09.2010 directing the DG to conduct an investigation in the case. Apart from the other reliefs the Informant also requested for an interim order directing BMPA not to impede release of its forthcoming films. The Commission passed order dated 30.09.2011 restraining the BJMPA from imposing any restriction in relation to release of film "Anjaana Anjaani". The Commission also passed an interim order in case of release of film "Golmaal 3" vide order dated 03.11.2011. Prima facie order and interim order in case no. 58 of 2010 3.9 In case no. 58 of 2010, order u/s 26(1) was passed on 15.11.2010 directing the DG to conduct an investigation in the case. In this case, also apart from the other reliefs the Informant also requested for an interim order directing BJMPA not to impede release of its forthcoming films. The Commission passed order dated 18.11.2011 restraining the BJMPA from imposing any restriction in relation to release of film "Guzaarish". The Informant also filed application under section 33 of the Act for extending the order dated 18.11.2011 to other forthcoming films including Tees Mar Khan. However, considering that the application for interim relief pertains to new films, the Commission decided not to entertain the petition of the Informant and advised that a fresh application is required to be filed. Prima facie order and interim order in Case Mo. 69 of 2010 3.10 In case no. 69 of 2010, order u/s 26(1) was passed on 21.12.2010 directing the DG to conduct an investigation in the case. In this case also, apart from the other reliefs the Informant requested for an interim order directing BJMPA not to impede release of its forthcoming films. The Commission passed order dated 23.12.2011 restraining the BJMPA from imposing any restriction in relation to release of its film "Teees Maar Khan". Investigation by DG
(3.) THE DG after receiving the orders under Section 26(1) of the Act, conducted investigation into the case. The DG first submitted a common investigation report on 04.11.2010 in five cases case no. 25, 41, 45, 47 and 48 and on 28.01.2011 in case nos. 50, 58 and 69. Thereafter DG also conducted a supplementary investigation based on the orders of the Commission dated 24.02.2011 on certain issues and submitted separate reports of investigation orders in all these cases. 4.1 After examining replies received from the opposite parties and documents supplied by the information provider, DG has come to the conclusion that the relevant product market in this case is the market of services rendered by the exhibitors in exhibition of feature films in cinema halls. The relevant geographic market has been determined as territories under the control of respective associations. The relevant market, therefore, has been determined as the market of screening films in the geographical area under the control of respective associations. Thus, for KFCC, while screening films in the area of its jurisdiction in the state of Karnataka has been determined as the relevant market, for Eastern India Motion Picture Association, Kolkata, the relevant geographic market has been determined as the State of West Bengal. Similarly for other associations, areas of their operations and control have been taken as the relevant geographic market while screening of films has been determined as the relevant product market. 4.2 After examining the provision of Section 4 of the Act, DG has concluded that being a non -commercial organization, KFCC & other associations are not enterprises within the meaning of Section 2(h) of the Act and also do not constitute a group within the meaning of Section 4 read with Section 5 of the Competition Act, 2002. DG has also considered that the Indian Competition Act as on date does not contain reference to the concept of collective dominance. Thus, it cannot also be said that members of the association have exercised their dominance collectively. According to DG, once KFCC & other associations are not the dominant players in the relevant market within the meaning of the Act, then the entire allegations of the Informant under Section 4 remain unsubstantiated. Based upon above, DG has concluded that no case can be made out against KFCC and other associations under Section 4 of the Act. 4.3 DG consequently examined the allegations against KFCC and other associations under the provisions of section 3 of the Act. KFCC(OP in case no. 25, 41, 45, 47 and 48) 4.4 As regards KFCC, it has been brought out that it is an association of film producers, theatre owners and distributors having about 5000 members, it acts as a regulatory body so far as production, distribution and exhibition of films by its members in the territory of Karnataka is concerned. The Association gives directions to its members regarding the release of regional and non -regional films in the territory of Karnataka. It has restricted the release of non -regional films in a limited number of theatres during the first two weeks of their release and a non -Kannada film can be released in all cinemas in Karnataka only after two weeks of its release in other film territories. 4.5 DG has brought out that although KFCC has stated that its membership is voluntary, but in reality the film distributors are not allowed to release their films in the State of Karnataka unless they are members of the Association. They also have to register their films with the Association before their release. Therefore, the membership of the Association is compulsory to carry on the film business in the State of Karnataka which is evident from letter dated 14.8.2010 written by KFCC to M/s Pal enterprises, in which it is specifically mentioned that a non -member cannot release films in Karnataka. According to DG, the Association collectively decides not to have any dealing with a person who does not agree with the directions of the Association, which is in violation of provisions of Section 3(3)(b) of the Act. 4.6 DG has also examined the Articles of Association of KFCC and found that the same contained certain clauses which are restrictive in nature. The specific clauses found to be restrictive by DG relate to suspension of membership (clause No. 10) vide which a member may be suspended from the membership by the Executive Committee if he deals with a non -member or with members under suspension and fails to comply with the resolution and/or directions of the committee in respect of business conduct, dispute, awards. Further, clause relating to removal & expulsion from membership (clause No. 11) and clause relating to powers of the committee to appoint, suspend and dismiss all temporary or permanent salaried employees of the chamber and to decide their service conditions, to warn, reprimand, fine, suspend, expel or otherwise penalize any member after giving him at least seven days notice to give him an opportunity to defend himself as per the rules framed (clause no. 14) have also been found to be restrictive in nature. 4.7 DG has also noted that clause no. 36 concerning Self Regulation Committee which regulates the conduct of the members who directly or indirectly violate or contravene the provisions of the Self regulation Code formulated by the Executive Committee from time to time so as to render himself liable to disciplinary action including suspension also is restrictive in nature. In case of any violation that warrants expulsion, the Executive Committee has been given powers to take suitable action. 4.8 According to DG, perusal of the aforesaid clauses of the Articles of Association/Constitution of KFCC clearly shows that it contains certain conditions which are restrictive in nature. The DG has noted that these clauses can result in foreclosure of competition by hindering entry into the market. Further, the clauses also had impact of driving existing competitors out of the market. The Association may collectively decide not to have any dealing with a person who does not agree with the directions of the Association. 4.9 DG in course of investigation also examined the communications, letters, e -mail, etc. of KFCC to determine their anti -competitive conduct in this case. DG has noted that KFCC through its various letters and communications has issued directions, which are anti -competitive in terms of restricting the exhibition of non -regional films, not permitting the non -members to release films, withholding the payment of distributors' share and non -supply of Kannada film to the Informant for non -compliance of the direction of KFCC. 4.10 DG has noted that KFCC has issued directive to its members stating that a non -Kannada film can be released only in 21 cinemas as opposed to Kannada film which can be released in 200 cinemas in Karnataka. Alternatively, a non -Kannada film can be released in all cinemas in Karnataka provided it is released two weeks after its release in other film territories, it has also given notice to the owners of the multiplex cinema halls directing them inter -alia to compulsorily give first preference to exhibit the Kannada films. The Kannada film will not be removed from the multiplex cinema halls without prior notice to the concerned producer and distributor. The members of the association are not free to release their films as per their choice and business commitment which is evident from the reply given by KFCC wherein it has stated that 95 percent of the films in Karnataka are released in accordance with the norms of KFCC. 4.11 According to DG, the concerted action jointly taken by the distributors of the Kannada films under the aegis of KFCC regarding the manner in which Kannada and non -Kannada films are to be released in the territory of Karnataka is anti -competitive which unfairly favors the Kannada film distributors and discriminate against non -Kannada film distributors. 4.12 According to DG, the said action imposes undue restrictions on the exhibition of non -Kannada films in the territory of Karnataka. The practices adopted, rules and regulations framed by KFCC and conditions laid down under the rules of the association are anti -competitive in violation of provisions of Section 3(3)(b) of the Competition Act 2002 since it tantamount to restricting the supply in the market through collective intent of all members of the association coming together on one platform. 4.13 DG has found that KFCC was indulging in issuing circulars and letters restricting the exhibition of non -Kannada films and taking punitive action against the Informants, even after issue of order under Section 33 of the Act which is clearly a deliberate anti -competitive conduct in violation of provisions of Section 3(3)(b) of the Act. Thus the conduct of KFCC was not only anticompetitive but repetitive in total disregard to the order of the Commission under Section 33 of the Act. According to DG, by imposing undue and unfair restrictions on the film distributors and exhibitors on screening of non -Kannada films, KFCC impedes competition as also violates the legitimate rights to carry out free trade and profession. 4.14 While concluding so, DG has also found that the acts and conduct of KFCC are causing/have caused AAEC in terms of the factors under section 19(3) of the Act. DG has noted that the intent of members of association is to collectively keep watch, inform each other of the developments of the market conditions and take decisions accordingly. Further, the conduct of KFCC clearly shows that it has been exercising its authority to regulate entries and exits and also has the power to impose heavy penalties for re -admission of the members. Thus, realizing that the association has the authority to penalize, any member just obeys the directions and orders of the Association without expressing any disagreement. 4.15 The anti -competitive trade practices adopted by the KFCC which are said to be violative of the provisions of section 3(3)(b) of the Act have been found by DG as under; i) Prohibiting its members to deal with non -members ii) Forcing the provision of mandatory registration of each film in its territory iii) Enforcing the restrictions on the number of cinema halls form non -Kannada film iv) Enforcing restriction on number of multiplexes for a non -Kannada film v) Enforcing restriction of 5 maximum shows daily of all non -Kannada films vi) Not allowing dubbing in Kannada language of other language movies. vii) Imposing ban/boycott against the producers, distributors and exhibitors viii) Issuing letters to the theatres to withhold the share amounts of the producers/distributors. EIMPA (Eastern India Motion Pictures Association), Kolkata 4.16 As regards EIMPA, DG has found that its rules and byelaws also make it mandatory to get films registered with the association and if a film is not registered with it, the share of distributors is not released. In this regard, DG has relied upon a letter dated 02.06.2010 of the Association in which directions were given not to release the share of distributors in case of the film 'Prince of Persia', since the film was not registered with the association. DG has concluded that provisions in the byelaws of EIMPA and its conduct, restricting its members to deal with non -members, making compulsory the registration of each film before release in its territory, issuing letters against producers for not registering their films like letter dated 02 -06 -2010 against the film Prince of Persia are anti -competitive in violation of the provisions of Section 3(3) (b) of the Act. Bihar and Jharkhand Motion Picture Association (BJMPA) 4.17 As regards, Bihar and Jharkhand Motion Picture Association (BJMPA), DG has noted that its Articles of Association (article 18) contains a clause which stipulates that a member can be suspended if he/she deals with non -members or with members under suspension. It has been concluded by DG that this clause imposes unjustified restrictions on the members to carry on free trade and business which is anti -competitive in contravention to the provisions of section 3(3)(b) of the Act. 4.18 DG has also reported that BJMPA has framed various rules for registration of films. These rules put certain restrictions on the producers and distributors of the films. Any producer or distributor desiring to do business in the territory of the Association has to get his film registered and also abide by the rules and regulations framed for this purpose. It is practically impossible to release a film without following the registration clause of these Associations. Rule 4 of these rules makes Registration compulsory. Rule 5 puts restriction that no distributor or exhibitor member shall enter into an agreement for distribution/exhibition of a picture unless the picture is registered with the Association. 4.19 The rules provide that application for registration of a picture the distributor has to fill a prescribed proforma (form 2A). It is necessary to fill this form by the producers and distributors before release of every film, mentioning the details of film and accepting for certain conditions, or declarations. The association also insists for a separate declaration through an affidavit from the producer at the time of registration. 4.20 According to DG, despite the membership being voluntary on paper, it is impossible for any distributor and exhibitor to do the business. The investigation shows that to carry out the business of film distribution in the territory of BJMPA it becomes essential for a distributor to take the membership otherwise he may not be able to do the business smoothly. 4.21 DG has also reported that BJMPA is forcing to accept the terms and conditions relating to the satellite/television/video release of a film to register a film in its territory. The OP itself has accepted that such conditions are imposed upon the Producers. 4.22 DG has also stated that the information gathered during the course of investigation in various cases against BJMPA, prove that it is violating the provisions of Section 3(1), 3(3)(b) and 3(4) of the Competition Act on account of its bye -laws/rules and regulation and activities. DG has found following as anti -competitive in case of BJMPA; i) Para 4(a) of the Articles of Association of BJMPA which says that no member shall have business dealings and contracts relating to distribution and/or exhibition of feature films in any language with any person within the territories to which this Association is extended, unless such person is a member and is not suspended pursuant to these articles and is a member of any Association affiliated to Film Federation of India or recognized by the Association. ii) Further, as per rules 5(a) of Articles of Association, no -distributor or exhibitor shall enter into an agreement for exhibition or distribution of a picture unless the picture is registered with the association in favor of the party contracting or/and supplying the picture for the purpose of exhibition or distribution. iii) Imposing ban by issuing caution circulars, directing their members not to deal directly or indirectly with the certain persons, iv) imposing conditions and terms on screening of a film on satellite/DTH not before five years from the date of premier release in the country, v) Imposing conditions on selling video/CD rights not before six months from the theatrical release of the film in the country iv) Imposing monetary penalties on the producers vi) Denying business opportunity by refusing to register films of certain producers and distributors and vii) Restricting the options of the members relating to the arbitration of disputes etc. Motion Pictures Association (MPA), Delhi 4.23 As regards Motion Pictures Association (MPA), DG has found that there are certain rules & regulations and activities of MPA which tantamount to the infringement of the provision of section 3 of the Competition Act. DG has noted following to be anti -competitive in case of MPA, Delhi; i) Para 13(vii) and (x) of Articles of Association of MPA which prohibit dealing with non -members. ii) Rule 16(i) of Articles of Association which stipulate that "no member of the Association shall distribute/supply and/or screen any picture unless it is registered with the Association. iii) Rule 42 which stipulates imposition of penalty and taking disciplinary actions for not following the rules of MPA. iv) Issuing interim circulars in which the members are cautioned to refrain from dealing with the certain producers. v) Activities like imposition of conditions and terms on screening of a film on satellite/DTH not before six months from the date of premier release in the country, vi) selling video/CD rights not before two weeks from the theatrical release of the film in the country vii) imposing a time limit of 10 years for agreement between producer and distributor viii) reserving the rights for arbitration between producer and distributor ix) pressurizing the producers/distributors of film for payment to the member distributor by refusing to register the film. Central Circuit Cine Association (CCCA) 4.24 As regards Central Circuit Cine Association (CCCA) also, certain rule & regulations and activities have been found by DG to be anti -competitive in accordance with the provision of section 3 of the Competition Act. Such rules & regulations and activities which are anti -competitive have been pointed out by the DG are as under: i) Para 4(a) and 15(c) of the Articles of Association of CCCA which prohibits dealing with non -members. ii) Rule 4 which provides that all Motion Pictures in Hindi, English, Bhojpuri, Rajasthani, Punjabi, Haryanvi, Sindhi, Gujarati, Chhattisgarhi, Malvi and Urdu languages and dubbed version in such other languages as may be decided by the Committee from time to time shall be compulsorily registerable unless an exemption is granted by the Committee in that behalf. iii) Rule 5(a) of the Rules for Registration of a Picture which stipulate that no distributor, sub distributor or exhibitor member shall enter into an agreement for exhibition or distribution or/and exhibit a picture, with any party unless the picture is registered with the Association in favor of the party contracting or supplying the picture, for the purpose of exhibition or distribution. Thus the Association restricts its members to deal with films which are not registered with it. iv) Rule 8 regarding registration of a picture which lays down restrictions on dealing with a certain class of producers. v) Rule 9 which lays down the conditions where a picture becomes non -eligible for registration. vi) Issuing caution letter against picture 'Anjaana Anjaani of M/s Eros international Media Ltd. on 18.09.2010 by which the member exhibitors were directed to not enter in to contract or release until and unless the picture is registered with CCCA. Letters were issued not to deal with film 'Anjaana Anjaani' failing which a penalty of Rs. 1,00,000/ - shall be imposed on the defaulting member. vii) Issue of confidential letters to the members regarding dealing with the producer of 'Action Replayy'. Further, the producers/distributors of the film 'Action Replay' were pressurized for payment to the member distributor by refusing to register the film. 4.25 According to the DG, the association has also imposed terms and conditions on screening of a film on satellite/DTH not before one year from the date of premier release in the country and on selling video/CD rights not before six months from the theatrical release of the film in the country. The association also issues caution letters against producers for the claim on account of premature telecast of films on satellite television. The producers are directed to settle the claim otherwise no forthcoming picture shall be eligible for registration. According to DG, these conditions are both anticompetitive and restrictive. Northern India Motion Pictures Association (NIMPA), Jalandhar 4.26 As regards Northern India Motion Pictures Association (NIMPA), Jalandhar, DG has noted that the provisions mentioned in Rule 16(a) of Regulations impose restriction on its members on dealing with non -members. Further, as per the provisions of Rule 22, members are prohibited to release/screen/book the picture unless it is registered. As per the registration form it is mandatory to undertake that the film cannot be released on satellite/television before expiry of one year. Similarly, it imposes restrictions on selling video/CD rights before two weeks from the theatrical release of the film in the country. 4.27 DG has also stated that it further imposes restrictions on selling and/or disposing of TV rights of the film for release in India and not before six months from the premier theatrical release of the Film in India. The association's activities also are restrictive and anti -competitive in nature which is evident from the action of refusing the registration of Film 'Action Replayy' and pressurizing the producer/distributor to settle the outstanding claims. Indian Motion Pictures Distributors Association (IMPDA) 4.28 DG has in course of investigation also found certain acts and conduct of IMPDA to be anti -competitive. DG has concluded the anti -competitive provisions and conduct of the association as under; i) As per rules and regulations for acquisition of distribution, exhibition and exploitation rights, members are required to register the film with the association. ii) The association directs its members to obtain undertaking from the producers to refrain from telecasting films through satellite, terrestrial or television/cable exploitation either directly or indirectly for a period of six months from the date of theatrical release. 4.29 According to DG, the members are using the platform of the associations to come to an agreement or understanding by which they may decide to boycott any member or non -member not to deal with him or her unless terms and conditions formulated by the association are accepted in full. The activities such as issuing circulars, caution letters among the members and compelling the producers to accept their directions, cause harm to free market since at many instances the associations had decided not to deal with any member or non -member, if directions of executive committee of the association are not followed. 4.30 DG has concluded following to be violative of the provisions of Competition Act in case of all these associations: i. Controlling the film distribution business by putting restrictive clauses in the Articles of Association that the members can only deal with the members of the association. Dealing with non -members is prohibited by these associations. These provisions create a situation wherein all the persons engaged in the business of film distribution and exhibition have to become the member of these associations to conduct the business smoothly and also to have access to all the films released in their territories. According to DG, this leads to refusal to deal as per the provisions of section 3(4) of the Act. ii. Controlling the film distribution business by way of compulsory registration. Refusal to register the film hampers the release of film which results in tremendous pressure on the producers. iii. Forcing the terms and conditions for the business of film distribution which otherwise should be decided between the producer and distributor. iv. By issuing circular/information among the members, these associations boycott a producer and thereby pressurize him to accept the directions and orders of these associations. v. Joint agreement with other associations to control the film distribution business in India. Their conduct indicates concerted action to restrict and impede the competition by controlling the market. vi. Restrictions imposed by KFCC on number of screen in which non -regional Films can be screened. 4.31 DG has also concluded based on the findings of investigation that no evidence/information has been found regarding anti -competitive activities by Telangana Film Chamber of Commerce, Chennai Kanchipuram Thiruvallur Districts Film Distributors Association and Orissa Film Distributors Syndicate.;