Introduction: The Evolution of Competition Law in India
The enactment of the Competition Act, 2002 is a major shift in improving India’s approach to market regulation from the previous Monopolies and Restrictive Trade Practices Act, 1969. Where the MRTP Act; curbed monopolies and had limited remedies like cease-and-desist orders with no monetary penalties for the initial violations this time the Competition Act has armed the Competition Commission of India (CCI) many powers from stopping anti-competitive behaviour to discourage its repetition through proportionate penalties, behavioural remedies, and structural interventions.
The biggest challenge for every competition law in to have a regime to hold powerful enterprises liable for market abuse as the same time ensure to have proper procedures in place for the individuals who manage them. This challenge acquired spotlight in the Supreme Court’s recent landmark judgment in Competition Commission of India v. Kerala Film Exhibitors Federation & Ors. (2025), where the most jurisprudential and practical question was raised i.e. when a corporate entity or an association commits violations as per competition law; what procedural safeguards must precede the imposition of penalties on their office-bearers?
The landmark case of Kerala Film Exhibitors is significant not just for its doctrinal clarifications but also because it reveals for India competition law matured in the recent times. It reveals the CCI’s intention to lift the corporate veil and hold individuals accountable, recognise the legality of structural remedies that go beyond monetary penalties, and establishes clear boundaries for procedural requirements that balance fairness with enforcement efficiency.
This article investigates the concept of anti-competitive agreements and abuse of dominance through a detailed study of Competition Commission of India v. Kerala Film Exhibitors Federation & Ors. (2025) judgment. Part I deals with the statutory framework governing competition law. Part II presents a detailed case study of the Kerala Film Exhibitors matter, tracking it from the initial complaint through to the Supreme Court’s definitive statement. Part III investigates the key legal principles established and their consequences for future execution.
Part I: Knowing Abuse of Dominance – The Statutory Framework
1.1 From MRTP to Competition Act: Why Change Was Necessary
To appreciate the Competition Act, 2002 and its philosophy; on must know the inadequacies of the MRTP Act. The predecessor was enacted in 1969, it emphasized the authoritarian economic era – which primarily focused on curbing the concentration of economic power in the hands of corporates. However, in 1990s when liberalization was adopted by India, the MRTP act exposed critical weaknesses.
Most importantly, the Commission in the MRTP Act could only issue cease-and-desist orders to stop harmful practices. No monetary penalties could be imposed for violation of the Act – only for disobeying the MRTP Commission’s orders. This resulted in a vicious incentive to enterprises: violate the law with intention to earn monopoly profits or eliminate competitors, and upon receiving orders simply cease the activity. In the absence of penalties violations were costless until detected and adjudicated and this could take years.
In May 2000, committee was constituted by the Central Government on Competition Policy and Law, recommended a need to shift from preventing concentration per se to promoting competition. Market dominance in itself is not problematic; what concerns is the abuse of that dominance to harm competition.
1.2 Section 3: Anti-Competitive Agreements
The Competition Act refers to anti-competitive agreements under section 3 and abuse of dominance under section 4; the Kerala Film Exhibitors case is principally concerned with Section 3.
Section 3(1) prohibits agreements between enterprises that cause or are likely to cause an appreciable adverse effect on competition within India.
Section 3(2) provides that any such agreement entered into (in contravention of the provisions contained in subsection (1)) shall be void.
Section 3(3) identifies particularly harmful categories of horizontal agreements—those between participant rivals at the equivalent level of the supply chain:
- Section 3(3)(a): Price fixing agreements used to directly or indirectly determine purchase or sale prices
- Section 3(3)(b): Agreements controlling production, supply, markets, technical development, investment or provision of services.
- Section 3(3)(c): Agreements for market allocation or customer allocation which could be on the basis of geographical area or type of goods or services or number of customers.
- Section 3(3)(d): Agreements for collusive bidding or bid-rigging.
Crucially, agreements falling within Section 3(3) are presumed to have an appreciable adverse effect on competition —the defendants need to exhibit pro-competitive reasonings.
1.3 Section 27: The CCI’s Remedial Actions
On contravention of Section 3 or 4, CCI is empowered under Section 27 to pass “all or any” of the following orders:
- Cease-and-Desist Orders [Section 27(a)]: Direct enterprises to discontinue and not to re-enter any such anti-competitive agreements or cease abuse of dominant position.
- Monetary Penalties [Section 27(b)]: impose penalty but not more than 10% of the average turnover for the last three preceding financial years. However, it further provided that for cartels specifically, penalties can reach three times the profit or 10% of turnover per year of continuance, whichever is higher.
- Modification of Agreements [Section 27(d)]: Direct the enterprises that agreements shall stand modified to eliminate anti-competitive elements.
- Behavioural Remedies [Section 27(e)]: Direct enterprises to abide with specific behavioural requirements, including payment of costs.
- Omnibus Power [Section 27(g)]: The super power to “pass such other order or issue such directions as it may deem fit.”
This last provision—Section 27(g)—is vital. It grants the CCI elasticity to craft adaptive remedies to specific cases, including what competition law researchers term “behavioural remedies” and “structural remedies.”
Behavioural remedies vary how a dominant enterprise manages operations without bringing any change in its structure. Examples include:
- Directing competition law training and compliance programs
- Demanding transparency in pricing or contract terms
- Elimination of exclusive conditions in agreements
- Enabling customer swapping mechanisms
- Amendment of corporate governance provisions
Structural remedies insist on changing of the enterprise’s structure itself:
- Disposal of assets or disinvestment in business units
- Separation of vertically combined operations
- Change in management
Structural remedies have additional important benefits as these remedies address root causes of market power, are generally one-time interruptions and are difficult to avoid.
1.4 Section 48: Lifting the Corporate Veil
Section 48 plays a significant role in addressing the enforcement challenge by ensuring accountability of individual when anti-competitive practices are demonstrated by a corporate or associations.
Section 48(1) – The Deeming Provision: Establishes automatic liability for individuals who were either in charge of, and are responsible for the company’s business conduct at the time of contravention. The expression “shall be deemed to be guilty” establishes mandatory liability based on position, not discretion.
Provided that individuals can escape liability by proving either (a) the violation occurred without their knowledge, or (b) they exercised all due diligence to avoid it. However, the burden of proof lies on the individual.
Section 48(2) – Extended Liability: notwithstanding anything contained in the sub-section 1; any violation under the act has taken place with the consent, connivance, or attributable to any neglect on the part of directors, managers, secretaries, and officers shall also be deemed to be guilty.
2023 Amendment: before this amendment the quantum of penalty on individuals was derived as per Section 27 but it had some interpretative uncertainty. Therefore, in 2023; Section 48 amended which added an penalty cap: individuals may face penalties up to 10% of average income for the last three preceding financial years (or 10% of income for each year of cartel continuance in case of cartels).
Part II: Kerala Film Exhibitors Federation – Anatomy of a Collective Boycott
2.1 The Market Context and Factual Set
The case of Kerala Film Exhibitors Federation & Ors. brings in how a collective action by horizontal competitors can harm the competition. Cinema halls in Kerala are largely independent businesses. However, Kerala Film Exhibitors Federation (KFEF), an association representing the interests of theatre owners in dealings with producers, distributors, and government authorities.
In 2012, a strike was called for by KFEF to push certain demands. On of the member exhibitor named Crown Theatre, declined to participate in this action. Later after the refusal, Crown Theatre resigned from KFEF membership. What happened next converted a simple membership dispute into a landmark competition law case.
Crown Theatre consistently found itself excluded from access to new film announcements—the essential commercial viability of any cinema hall. Crown Theatre not only faced collective boycott by all the KFEF members but also Film distributors were allegedly warned to supply any films. This clearly stated that KFEF’s membership represented dominant position for exhibition venues across Kerala and this dominance was being used as a coercive weight. No distributor or supplier could afford to blacklisted from the entire Kerela Market just to accommodate one theatre.
To bring this in action; KFEF’s leadership, combined institutional authority with personal intervention particularly President P.V. Basheer Ahamed and General Secretary M.C. Bobby, allegedly played active roles in communicating and enforcing the boycott decision.
2.2 The Smoking Gun: Direct Evidence of Enforcement
As anti-competitive agreements can be spoken also, so they are rarely documented in writing; therefore competition law cases often struggle with proof. Even Cartels operate in shadows; cooperation is achieved through nods rather than signed contracts. The Kerala Film Exhibitors case, however, showed remarkably direct evidence.
A film distribution company, Mukesh Mehta, proprietor of E4 Entertainment, provided evidence that would prove devastating. According to Mehta, he released a Tamil film “Raja Rani” at Crown Theatre. Right away, he got a call directly from KFEF’s President, Mr. Basheer Ahamed commanding him to withdraw the film from Crown Theatre. Within three days, the film was pulled from exhibition.
This is a direct evidence of personal involvement by KFEF’s leadership in imposing the collective boycott. Other distributors supported the pattern. Representatives of Friday Tickets and RM Films testified pressure from KFEF due to which they refused to supply films to Crown Theatre; fearing revenge in the form of denial of access to other Kerala theatres from KFEF.
The evidence made the picture clear of systematic exclusion where KFEF members, acted in concert through their association, effectively denied Crown Theatre access to essential operation i.e. films required for any cinema hall commercial viability. This kind of arrangement of horizontal coordination wherein agreement among competitors to limit supply of good or services in a manner to cause appreciable adverse effect on competition comes under Section 3(3)(b).
2.3 The Regulatory Proceedings: From Complaint to Investigation
In 2014, Crown Theatre filed an complaint under Section 19 with the CCI. After initial examination of the allegations, CCI formed the opinion that the case needed investigation under section 26(1).
Furthermore, on 8th May, 2014, CCI via order directed the Director General to investigate the matter in details specifically “the role of individuals who were in charge of conduct of affairs of KFEF association.” This foremost direction proves that accountability of individuals was taken into notice from the starting and not added later on when deciding penalties.
During the DG’s comprehensive examination, multiple film distributors were summoned as per section 36(2) and Regulation 41 of the Competition Commission (General) Regulations, 2009. Crucially, Mr. Basheer Ahamed himself was summoned to confront with witnesses statements; including Mukesh Mehta’s testimony about the phone call. However, Mr. Ahamed failed to apply this opportunity effectively; to deny, explain or explain the allegations.
On May 22, 2015, the Director General submitted his report. The report’s conclusions were undisputable:
First, there was violation of Section 3(1) read with Section 3(3)(b) by KFEF through engagement in agreement to limit supply of films to Crown Theatre, causing appreciable adverse effect on competition.
Second, in the report a dedicated chapter named “Role and Liability of Office-Bearers” was included specifically examining the conduct of particularly President P.V. Basheer Ahamed and General Secretary M.C. Bobby. Both the persons played active role in KFEF’s anti-competitive activities; hence were identified as “key persons” and “key decision makers”
2.4 The Opposed Notice: June 10, 2015
After the reporting by DG, on 10th June, 2015 the CCI issued a notice since then litigation lasted for a decade. CCI directed that electronic copies of investigation report to be sent not only to KFEF but also specifically and individually to Mr. Basheer Ahamed and Mr. M.C. Bobby; identified by the DG as office bearers of opposing party who were also the decision makers among other office bearers.
The notice called for:
- Written replies from parties by July 14, 2015.
- Submission of financial statements by KFEF for FY 2011-12, 2012-13, and 2013-14
- Essential submission of income details including IT Returns for those same financial years by Mr. Basheer Ahamed and Mr. M.C. Bobby
- Personal appearance before the Commission for oral hearing on July 22, 2015
The CCI intentionally requested for personal ITRs demonstrating that they are accessing individual financial capacity for penalty imposition as per Section 48.
A single lawyer was hired by all respondents, made detailed submissions and exercise the right of oral hearing; still they failed to provide any evidence and proof as per Section 48(1) that they exercised due diligence to prevent violations or that it occurred without their knowledge.
2.5 The CCI’s Final Order: Penalties and Structural Remedies
The Commission’s investigation progressed precisely and final order was issued on 8th September, 2015 providing liability and appropriate remedies.
On Liability:
For violation of Section(1) read with Section 3(3)(b) by KFEF through horizontal agreement among members of association for refusal to deal with a competitor harmed the market.
Under Section 48(1), regarding individual liability, the CCI applied deeming provision Mr. Basheer Ahamed (President) and Mr. M.C. Bobby (General Secretary) held the most senior positions and as they could not provide proper defences were also liable.
The Annoying Factor:
In an earlier proceeding—Case No. 45/2012 titled Kerala Cine Exhibitors Association v. Kerala Film Exhibitors Federation, Mr. Basheer Ahamed (President) and Mr. M.C. Bobby (General Secretary) the same office bearers had been found guilty for similar anti competitive conduct and penalized at the rate of 7% of their average income.
Even after that despite of CCI’s notice regarding disapproval of such practices and when the investigation was ongoing; they continued the same conduct which in turn that formed the subject matter of the present case (Case No. 16/2014). This repetition of wrong conduct has drastically weighed the Commission’s penalty determination. As the order stated, the persons had “turned a blind to the past orders of the CCI against like film associations in other states for similar anti-competitive conduct as well as the on-going investigation against it in Case No. 45 of 2012.”
The Penalties Imposed:
Monetary Component:
- KFEF: ₹ 82,414.52 (10% of average income)
- Mr. Basheer Ahamed: ₹ 56,397.07 (10% of average income)
- Mr. M.C. Bobby: ₹ 47,778.60 (10% of average income)
Monetary penalties even when calculated at the maximum rate of 10% as per law, were modest with the given income levels. CCI in this case recognised that monetary penalty alone is insufficient as these individuals have committed the same conduct on continuous basis.
Behavioural Remedies:
- Immediate cease-and-desist orders for all anti-competitive behaviour
- As a systematic reform measure KFEF was ordered to organize at least five competition awareness and compliance programs over six months for its members
Structural Remedies – The Spirit of the Controversy:
- KFEF directed not to associate with Mr. Basheer Ahamed and Mr. M.C. Bobby for any of its affairs, including administration, management, and governance, or in any other manner for a period of two years
This structural remedy—was an extraordinary step to the cycle of continuous anti-competitive conduct due to the individuals in KFEF’s leadership.
2.6 COMPAT’s Partial Turnaround: The Procedural Objection
The three respondents appealed to the Competition Appellate Tribunal (COMPAT). The Tribunal came up with a split decision in its judgment dated 19th April, 2016:
Upheld: All findings for KFEF’s contravention, the penalization on KFEF, and the cease-and-desist orders.
Set Aside: All penalties on the individuals and the two-year ban on association with KFEF.
The setting aside as per COMPAT was due to procedural grounds. While acknowledging that the DG’s report was forwarded to the individuals and they had the opportunity to respond, the Tribunal held that the individuals should have received a specific notice proposing to impose penalties on them and proposing to debar them from KFEF’s management.
The COMPAT stated that CCI haven’t given enough opportunity to be heard and violated the rule of natural justice by imposing penalties and debarment without a separate notice proposing these specific sanctions.
This reasoning – while protecting the individual rights, raised intense questions about Competition law procedural practices. Will every penalty require separate show-cause notice specifying proposed quantum and type? Will this result in two-phase proceedings (first on liability, then on penalty)? Will this extend cases proceedings and provide violators opportunities to drive away assets? These fundamental questions proceeded to the Supreme Court for definitive resolution.
Part III: The Supreme Court’s Definitive Verdict
3.1 Statutory Clarification: No Second Notice Required
The Supreme Court embarked on exhaustive statutory analysis, reading Sections 26, 27, 36, and 48 along with relevant regulations as an unified representation.
Procedural Architecture of Section 26:
The Court discovered that the investigation and inquiry process systematically.
Remarkably, the Court noted that the Commission is not bound by the DG’s conclusions. If the DG finds no violation, the Commission can even so proceed with further examination. If the DG finds violation, the Commission still does independent assessment. This independence means that delivering the DG’s report and providing opportunity to reply serves as the foundation for all later proceedings. The report contains the full findings and recommendations—everything a defendant needs to know to answer.
Deeming Provision – Section 48:
The Court underlined that Section 48(1) creates statutory presumption of liability for individuals in charge of and responsible for a company’s business when a contravention occurs – “shall be deemed to be guilty.” The only escape routes are proving lack of knowledge or proving exercise of due diligence. In the absence of such proof, liability attaches automatically once the enterprise’s violation is established.
The Court’s Standing:
The Court ultimately held that the notice dated 10.06.2015 fulfilled all legal requirements, as Section 48 automatically presumes liability on persons in charge and was responsible…., with the statute itself deciding punishment. Therefore the court stated- “We are fully convinced that the notice dated 10.06.2015 fulfils the requirement in law as it then stood.”
There is no mandate in the statute for issuance of a second show cause notice setting out proposed penalty.”
3.2 Proportionality of Penalties
Having proven procedural compliance, the Court turned to fundamental scrutiny: were the penalties proportionate?
Illustrating from Excel Crop Care Ltd. v. CCI (2017), the Court restated that proportionality is both statutory and constitutional mandate, requiring balance between:
- Impact caused to consumers and markets (justifying robust penalties)
- Rights of wrongdoers not to suffer disparate punishment
Application:
Monetary Penalties: The amounts (₹56,397 and ₹47,778) were demonstrably modest given the severity of conduct.
Repeat Offender Status: Both individuals had been penalized at 7% of income in Case 45/2012 for similar conduct, which further continues in this case. This explained escalation of penalty to 10%.
Structural Remedy Justified: The two-year ban absolute and most needed resolution to address the problem—deep-rooted leadership was used repeatedly with associational power to curb competition. It was temporary, targeted (specific to KFEF, not to whole industry), and necessary (monetary penalties alone failed earlier).
The Court concluded: “We do not find that the penalty is inconsistent… The acts committed had serious and damaging effect on the informant and the general public.
3.3 Structural Remedies and Omnibus Power under Section 27
The verdict’s most substantial contribution may be its recognition of structural remedies as legitimate implementation tool under Section 27.
The Court explained that when behavioural remedies affecting corporate governance are imposed on an enterprise, consequent orders affecting individuals may be necessary to actually set up those remedies otherwise without such powers CCI’s remedies wont work to such extent as needed to fulfil the spirit of law.
The penalty on KFEF (governance reform) was fundamental. The direction to individuals not to associate was the necessarily consequent to make KFEF’s penalty effective. One cannot work without the other.
Conclusion: Effects and the Way Forward
The Supreme Court’s conclusion in Competition Commission of India v. Kerala Film Exhibitors Federation establishes foundational principles for competition law implementation in India, resolving various procedural and substantive questions.
Procedural Framework: The Court settled that the Competition Act observes a sole-stage hearing on both liability and penalty, with the Director General’s investigation report serves as adequate notice for all adverse evidence and findings. No separate show-cause notice is required before the CCI imposes penalties. Section 48’s deeming provision creates automatic personal liability for individuals in charge of enterprise committing violations.
Remedial Powers: The CCI retains remedial discretion under Section 27, including authority to impose structural remedies. When proportionate and necessary for deterrence, such remedies fall straight within the Commission’s statutory mandate. Repeat offenders justify increased penalties, including acceleration from monetary sanctions to structural interpositions when financial penalties prove insufficient.
Broader Significance: The verdict represents the evolution of India’s competition regime into a modern implementation framework. It progresses from merely imposing fines to recognizing competition enforcement as a versatile regulatory enterprise requiring diverse remedial tools.
As digital platforms and complex markets are growing; the emphasis on structural reform and personal accountability signals advancement capable of addressing complex market abuses will prove indispensable. Therefore, it can be understood from this case that competition law exists not to punish randomly, but to reinstate and protect competitive market structures in service of consumer welfare.
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