On the 3rd of January 2024, the Competition Commission of India, also known as CCI, issued an order rejecting the claim that PVR, India’s leading multiplex chain, engaged in anti-competitive practices by misusing its dominant position in the market in the film exhibition sector. The complaint was filed by the filmmaker Yogesh Pratap Singh, who alleged that the PVR’s practices have significantly favoured large production houses, marginalising independent filmmakers and thus creating significant barriers to entry. The CCI thoroughly reviewed the matter and concluded that the claims lacked substantive evidence and did not violate section 4 of the Competition Act, 2002, which governs the abuse of a dominant position. This analysis delves into the allegations, PVR’s responses and the CCI’s rationale for this decision, highlighting its implications for competition regulation in India’s Film Industry.
Mr Singh’s primary allegation was that the PVR’s dominance in the film exhibition market enabled it to favour films produced by financially powerful production houses while constraining the access and visibility of independent filmmakers. He asserted that this preferential treatment done by the PVR causes disruption to fair competition and stifles smaller production entities in the film exhibition market. Mr Singh stated that PVR engaged in cartelisation and vertical Integration by expanding into film production and distribution, thereby consolidating control over the film exhibition chain to the detriment of independent filmmakers. The various instances cited are the extensive promotional support provided by the PVR to high-budget films like Brahmastra and RRR, including widespread screen allocation, rebranding initiatives and additional promotional placements. Mr Singh’s independent cinema, Kya Yahi Sach Hai, which he claimed had potential based on over 1.3 million YouTube views, was allegedly sidelined, receiving inadequate screen allocation and minimal promotional support. He contended that his preferential treatment discouraged new entrants and smaller filmmakers from participating meaningfully in the market, ultimately harming competition.
In response to the allegations, PVR refuted the allegations as unsubstantiated and asserted that the complaint sought to pressure the multiplex chains into screening the complainant’s film, absent any legal basis for such demands. PVR stated that its agreements with independent filmmakers and large production houses were subject to similar terms and conditions. Further, the multiplex chains clarified that revenue generation was a crucial determinant in screen allocation and promotional support, prioritising films with more significant revenue potential based on objective factors rather than preferential treatment. PVR argued that its vertical integration, which includes forays into production and distribution, is aimed at streamlining operations, improving efficiency, reducing costs, and not undermining competitors. Moreover, the company contended that it derives most of its revenue from third-party films, thereby diminishing the incentive for preferential treatment in favour of any single entity, including its productions.
Upon evaluating the allegations, CCI determined that the case presented no discernible threat to competition. The Commission underscored that the commercial discretion exercised by exhibitors like PVR aligns with the market dynamics, primarily driven by consumer demand, film-specific excitement and box office potential. The CCI noted that without concrete evidence of anti- competitive harm, regulatory intervention would likely produce undesirable consequences undermining business autonomy and market-based decision making. In examining claims of vertical Integration, CCI reaffirmed that such arrangements are not inherently anti-competitive under Indian Competition Law. Vertical Integration may enhance operational efficiency, showing adverse effects on competition; the Commission found no grounds for intervention based on PVR’s Integration into production and distribution.
Regarding PVR’s screen allocation policies, the CCI’s order emphasised the importance of commercial autonomy in determining film allocation and promotional support. The CCI’s decision to dismiss allegations of abuse of dominance against PVR underscores the necessity for robust evidence when substantiating such claims under Section 4 of the Competition Act. The Commission recognised that commercially rational factors such as expected revenue, marketing efforts, and historical performance do not inherently indicate anti-competitive practice, particularly when aligned with consumer demand and business strategy. Notably, the ruling supports the legality of vertical Integration for efficiency purposes, provided there is no demonstrative harm. The CCI’s approach emphasises evidence-based adjudication, which is particularly significant within the entertainment industry, where market dynamics and consumer-driven metrics heavily influence business decisions.
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