Case Law Details

Case Name : Kansan News (P.) Ltd. Vs Fast Way Transmission (P.) Ltd. (Competition Commission of India)
Appeal Number : Case No. 36 of 2011
Date of Judgement/Order : 03/07/2012
Related Assessment Year :

Competition Commission of India

Kansan News (P.) Ltd.

vs.

Fast Way Transmission (P.) Ltd.

Case No. 36 of 2011

JULY 3, 2012

Order under Section 27 of the Competition Act, 2002

The present matter relates to information received from M/s Kansan News Private Limited (hereinafter referred to as the “informant”) on 18.07.2011 under Section 19(1) (a) of the Competition Act, 2002 (hereinafter referred to as “the Act”) for alleged infringement of provisions of section 3 and section 4 of the Act.

2. The facts of the case as per the information, in brief, are as under:

2.1 The informant is broadcaster of a news and current affairs TV channel known as ‘Day and Night News’ (hereinafter referred to as “the Channel”) and is operating in the states of Punjab, Haryana, Himachal Pradesh and Union Territory of Chandigarh. The Opposite Parties – M/s Fast Way Transmission Pvt. Ltd. (hereinafter referred to as “OP-1”), M/s Hathway Sukhamrit Cable & Datacom Pvt. Ltd. (hereinafter referred to as “OP -2”) and M/s Creative Cable Network Pvt. Ltd. (hereinafter referred to as “OP -3”) are the Multi System Operators (MSOs). The Opposite Party- 4 is operating in Punjab and Union territory of Chandigarh through the Opposite Party-3. Mr. Gurdeep Singh (hereinafter referred to as “OP-5”) is the Managing Director of Opposite Party-1 and is directly managing and controlling the business affairs of the Opposite Parties- 1, 2 and 3. He is also indirectly managing and controlling the business affairs of Opposite Party-4.

2.2 It has been stated in the information that the Opposite Parties- 1, 2 and 3 have control over 95 % of the cable network distribution system in the State of Punjab and Union Territory of Chandigarh. The informant, citing the India Leadership Survey Report, has submitted that in the State of Punjab there are 43.18 lakh television viewers households, out of which approximately 35 lakh television viewers households have cable connections which are primarily provided by OP- 1 to OP- 4. The OP-5 is closely affiliated politically with ruling dispensation in the State of Punjab and has virtually finished and/or bought over all small cable operators and have taken the control of the cable network distribution business in Punjab. Any broadcaster who wishes to telecast and access the viewers in the State of Punjab has no other option but to approach the Opposite Parties-1 to 5 as they virtually control the entire cable network.

2.3 Referring to the Annual Returns filed by OP-1, OP- 2 and OP- 3 before the Registrar of Companies, it has been submitted that the Opposite Party-5 holds majority share of OP- 1, OP- 2, OP- 3 and OP- 4. Further, all agreements for and on behalf of Opposite Parties-1 to 4, including the agreements with the informant for carriage of their channel on the cable network of the Opposite Parties had been negotiated and entered into by OP-5. These facts, according to the informant show that the OP-5 runs, operates and controls the affairs of OP-1 to 3.

2.4 The informant has submitted that with substantial market share in the cable network distribution system in the state of Punjab and the Union Territory of Chandigarh, the Opposite Parties as a group have formed cartel and are abusing their dominant position by acting in an illegal, arbitrary and discriminatory manner, controlling the services of transmission and broadcasting of Television channels in the State of Punjab and Union Territory of Chandigarh, resulting in denial of market access to its channel, thus, violating section 4 of the Act.

2.5 The informant has further submitted that by illegally and simultaneously terminating the agreements for carriage of the channels of the informant, the Opposite Parties have acted as an association of enterprises and /or a cartel seriously and adversely affecting the competition by denying the broadcasting of news and current affairs channel of the informant in the State of Punjab and UT of Chandigarh in violation of section 3 of the Act.

2.6 As per the information, after entering into agreements with the informant for re-transmission of its channel OP-1, OP- 2 and OP- 3 started transmitting its channels through their networks effectively from August, 2010. For about two months, the Opposite Parties transmitted the channel of the informant smoothly without any problem or complaint from either side. All payments were made as per the agreements and there were no outstanding dues of the Opposite Parties against the informant. However, since mid-October 2010, the Opposite Parties started disrupting transmission of its channel and distorted/disconnected its channel on several occasions.

2.7 The informant has given details of some of the instances/occasions, when the signals of the channel of the informant were distorted /disconnected/blacked out by the Opposite Parties as under:

(a) In October, 2010, when the Finance Minister of Punjab Mr. Manpreet Singh Badal quit the Government as well as the Shiromani Akali Dal, the coverage accorded to him was either blacked out or tuned out. In one instance, the Opposite Parties patched the audio of a cartoon channel on the channel of the informant.

(b) On December 15, 2010 when the channel of the informant ran a report on the Youth Akali Dal patron and former Punjab Minister Bikramjit Singh Majithia’s meeting/rally at Mohali from which the audience started walking out when he began to speak, the cable carrier switched off the news station.

(c) On December 22, 2010, the channel of the informant was blacked out for showing Punjab Congress President Captain Amrinder Singh’s Road show in the State.

(d) On December 25, 2010, the Opposite Parties first blacked out and then muted the audio of the channel of the informant without any reason. Since December 25, 2010 the audio of the channel of the informant has not been restored.

(e) The Opposite Parties also altered the slot of the channel of the informant on the cable spectrum, without intimation to the informant, in several areas of Punjab.

2.8 The informant has submitted that when transmission of its channel was interrupted, blacked out and/or distorted, it wrote letters on 15.10.2010 and 26.12.2010 calling upon the Opposite Parties not to indulge in such unfair and illegal activities. However, the Opposite Parties did not respond to the letters of the informant.

2.9 According to the informant, the Opposite Parties orally said that the interruptions, distortions and black out of its channel were on account of certain technical problems. The informant has also sent an e-mail to the Opposite Parties dated 29.12.2010 offering them to rectify the alleged technical problems and asked them to permit its technical experts/engineers to visit the head ends of the Opposite Parties so as to check and solve the alleged technical problems in the system which enable the audio and video transmission of the informant’s channel to work. However, the Opposite Parties did not give any reply to the informant in this regard.

2.10 As per the information, in view of the aforesaid illegal and anti-competitive practices of the Opposite Parties, the informant issued a legal notice to the OP- 1, OP- 2 and, OP- 3. In relation to the legal notice of the informant, the Opposite Parties unilaterally terminated the Channel Placement Agreements with it without assigning any reason. The termination letter/cancellation of contract of re-transmission of informant’s news channel on their networks was also conveyed by the Opposite Parties by issuing a public notice.

2.11 The informant has alleged that the obstructions/interruptions that caused interference with transmission of informant’s channel were deliberate, conscious and was done with oblique motives to harass the informant and to compel it to follow the dictates of OP- 5 in regard to non-telecast/non-coverage of news which are not in favour of the present ruling political party of Punjab.

2.12 According to the informant, the Opposite Parties by controlling the market of services of transmission of TV signal from broadcasters in the State of Punjab and Union Territory of Chandigarh, by denying the market access to the informant to telecast its channels and by denying the consumers to view the channels provided by the informant have violated the provisions of sections 3 and 4 of the Act. Due to the aforesaid illegal and anti-competitive activities of the Opposite Parties, the informant has been suffering huge financial losses as well as losses in terms of loss of its image and reputation in the market.

2.13 The informant has also alleged that the Opposite Parties, by forming cartel, are limiting the provision of service of broadcasting of T.V Channels through Cable Network in the state of Punjab and the Union Territory of Chandigarh in contravention of the provisions of section 3 of the Act.

2.14 it has further been alleged by the informant that the Opposite Parties by limiting and denying access to the news and current affairs channel of the Informant have violated the provisions of section 3(3)(b) and section 4(2)(c)of the Act.

2.15 It has further been alleged that the Opposite Parties acting in a totally illegal, unfair and discriminatory manner have contravened the provisions of section 3(4)(d) of the Act by terminating the Channel Placement Agreements unilaterally and without any basis and thereby adversely affecting competition by abusing its dominant position. The informant has also alleged that the Opposite parties by acting as a group have imposed unfair and discriminatory conditions for broadcasting the informant’s channel of its cable network in total contravention of the provisions of Section 4(2) (c) of the Act.

2.16 The informant has also alleged that the Opposite Parties are indulging in monopolistic and restrictive trade practices and also violating the provisions of Telecommunication (Broadcasting & Cable Services) Interconnection Regulations, 2004. As per the said Regulations it is obligatory on the part of the Opposite Parties to re-transmit the signals received from the broadcaster on non-discriminatory basis. However, the Opposite Parties are denying re-transmission of the signals of the informant. The informant has further submitted that refusal of the Opposite Parties to re-transmit signals amounts to suppressing the right of freedom of speech and the rights and legitimate expectations of the viewers as per the Constitution of India.

2.17 The informant also filed application for interim orders to stay the termination of Channel Placement Agreements dated 01.08.2010 entered into with OP-1 to OP-3 and restrain the Opposite Parties from denying access to the informant’s Channel through their Cable Distribution Network. It was also pleaded that directions be issued to the Opposite Parties to ensure that its Channel is transmitted uninterruptedly and without any hindrance or disturbance on their Cable Distribution Network during the pendency of investigation.

3. The Commission having considered the matter formed an opinion that a prima facie case exists in the matter and directed the Director General (hereinafter referred to as the “DG”) to cause an investigation into the matter.

Findings of DG

4. On receipt of the order of the Commission, DG conducted investigation into the matter and in accordance with the provisions of section 26(3) of the Act submitted report of investigation to the Commission on 21.02.2012.

4.1 For the purposes of the investigation, DG sent notices to the concerned parties and also collected information from the third parties. DG also relied upon secondary sources of information such as the consultation paper of the Telecom Regulatory Authority of India (TRAI) on “Implementation of Digital Addressable Cable TV Systems in India” to understand the functions of the cable TV market.

4.2 In course of investigation, DG also analysed the nature and operation of cable TV market in India. As per DG, there are four main supply side players in the cable TV services such as Broadcasters, Aggregators, Multi System Operators (MSO), and Last-mile Cable Operators (LCO). The end consumer gets services from the LCOs. The broadcaster’s role in the supply chain includes transmitting or “up-linking” the content signals to the satellite (from where they are “down-linked” by the distributor). The broadcasters own the content to be televised and received by the viewers. An aggregator is a distribution agent who undertakes the distribution of TV channels for one or more broadcasters. The role of the aggregator in the supply chain is to provide bundling and negotiation services for subscription revenue on behalf of the broadcasters.

4.3 DG further brought out that the role of a MSO is to downlink the broadcasters’ signals, decrypt any encrypted channels and provide a bundled feed consisting of multiple channels to the LCOs. The role of LCOs in the supply chain is to receive a feed (bundled signals) from the MSOs and re-transmit these signals to subscribers in his area of operations through cable network.

4.4 According to DG, the television programmes distribution market in India consists of four platforms viz. Terrestrial TV, Cable TV, DTH and IPTV. The terrestrial TV is available free and no subscription charges are paid by the consumers. Therefore, it can be placed in a different segment from three other platforms viz. Cable TV, DTH and IPTV. The IPTV is very new platform for television viewing in India and at present it is not available throughout the country. Thus in the current scenario in India only two platforms are most popular and preferred modes of television viewing. The cable TV, which has a widespread network and subscriber base; and DTH with better quality and flexible programming is a choice for the higher income group people in India or of the consumers who are not connected with cable network and can pay the subscription amount to DTH. The market players are also different on both the platforms.

4.5 DG has distinguished between cable TV and other medium of transmission of TV channels such as DTH, IPTV etc. and has stated that other platforms of transmission of TV channels are not the perfect substitutes of the cable TV. As per DG, in terms of features, quality, network, reach, price, technology and number of players, cable TV is different from DTH or any other modes of transmission. DG has also reported that the interchangeability between DTH and Cable from the consumer or subscriber side is negligible in view of the above mentioned differences. The consumers of cable TV definitely want to have the quality of picture and sound like DTH but in view of monthly price, initial cost infrastructure requirements, present technology and method of access etc. the cable TV consumers are not migrating to DTH which shows that the DTH and cable TV are not interchangeable products. Accordingly, DG has delineated the relevant product market in this case as the provision of cable TV services.

4.6 As regards relevant geographic market, DG has taken the same to be the territory of Punjab and Chandigarh. In support, DG has stated that cable TV market has a geographical limitation on account of various factors such as availability of cable network, local specification requirements, language, etc. Further, the conditions of competition for provision of cable TV in different states/region are different owing to difference in consumer choice. The channels transmitted by a cable operator in Punjab and Chandigarh are different from the channels transmitted by a cable TV operator in other states because of many local factors. The area covering the states of Punjab & Chandigarh with their specific features like language, culture, local influences, regional politics constitute a distinct geographical Market. According to DG, TRAI in its report has also identified Punjab as different markets than the rest of India.

4.7 During investigation, DG found that OP 5 holds majority share of OP 1, OP 2, and OP 3 and controls and manages the affairs of OP 1 , OP2 and OP3 directly. The OP 5 has more than 50% share in OP 1 and OP 2 and 99% shares in OP 3. Accordingly, DG has concluded that all the Opposite Parties 1, 2 and 3 are a group (“Fast Way group”) as per the provisions of the Act.

4.8 DG has also reported that Shri Gurdeep Singh i.e. OP- 5 has neither share in excess of 26% nor is in position to appoint more than fifty percent members of board of directors of WWIL. Nothing on record is found to show that the management of the company is in the hands of Fastway group of companies. Thus, as per DG, the OP-4 cannot be treated as a part of the group of enterprises.

4.9 DG has also reported that that in addition to OP-1, OP-2 and OP-3, many other new companies in the same relevant market have been incorporated or taken over by the Fastway Transmission group who are acting as affiliates of the Fastway Transmission. All these companies are operated from the same premises and operated by same set of people.

4.10 With regard to dominance of the Opposite Parties, as per DG, in the relevant market, the Fast Way group commands a market share of more than 85% in terms of total number of subscribers of cable TV. In four cities of Punjab where WWIL is existing in the market with about 25-35% market share, the operation of its network is under the control of Fastway group. Even otherwise, for the sake of argument, if it is presumed that the control of WWIL is not under the group, the market share of Fastway group excluding the share of WWIL in these cities remains more than 60%.

4.11 On the basis of above, DG has concluded that Fastway group commands a dominant position in the relevant geographical market of Punjab and Chandigarh controlling the market share of more than 85%. As per DG, in terms of size and resources the group is much bigger than any of the competitors in the state of Punjab & Chandigarh. The group has its cable network and headends in all the districts of Punjab whereas other competitors are operating in only one or two districts only. Fastway has digital and analog head-ends spread across the state of Punjab to control the cable network in the state. It operates through its control rooms located in Ludhiana, Amritsar, Jalandhar, Patiala, Bathinda, Chandigarh and Pathankot. It has also spread a network of optical fibre in the state to strengthen its market power by adopting latest technology in the region.

4.12 According to DG, the total turnover of the group from cable TV operation during the F.Yr.2010-11 was more than Rs.200 crore. Considering the share of Punjab state at about 2 % of the total cable network of India, its turnover clearly make the Fastway group a dominant player in the region of Punjab. Due to its vast network and physical presence coupled with regional factors it has greater commercial advantages over the competitors. The competitors of OP group are some small MSOs with single analog headends, comprising of a very small network and subscribers base.

4.13 DG has also reported that the consumers of cable TV in Punjab & Chandigarh have huge dependency on the OP group. They do do not have any substitute to switch over the other network as the maximum market is controlled by the OP group. As per the DG, at the time of ICC world cup when the group did not transmit the ESPN/Star channel on its network, the consumers had no option of other cable network. The consumers have no say in selection of channels on its network, neither in terms of quality or band of channels transmitted to them.

4.14 DG has further reported that due to vast network, market share, market dynamics, resources and local factors the OPs are able to create entry barriers for the competitors in the region. The group with more than 85% of market share, its control in the market and presence all over the state makes it difficult even for the big players like Den networks to enter into the relevant market. Its control over the LCO and subscriber base of more than 40 lac households makes it difficult for any stakeholder to disagree with the conditions imposed by it. The broadcasters who are the content provider refrain from dealing with its competitors in the region.

4.15 As per DG, the informant being a broadcaster of a news channel in Punjabi, Hindi and English language entered into the agreement with the OPs for transmission of its channel with the Fastway Transmissions and its affiliates as they commanded the maximum market share in its target viewership areas. The subscriber base of the Opposite Parties exceeds 40 lac making every broadcaster dependent upon their network. Therefore, the informant being a regional broadcaster had greater dependency on the network of the OPs.

4.16 According to DG, the OP group demanded a price in the form of carriage/placement fee for allowing the transmission of informants channel on their network. The informant in view of the large subscription base of the OPs accepted the demand of placement fee and entered into the agreement.

4.17 DG has submitted that between August 2010 to January 2011, no big change in the commercial status or situation of agreement occurred which compelled the OPs for review of their agreement in January 2011 to terminate the transmission. The informant was paying the premium to the OPs in the form of placement fee charged on account of mismatch in the demand and supply in distribution network. The argument of OP that since no demand or popularity of the channel of the informant was found among the consumers it caused mid-term termination of the agreement has no weightage or force since the TRP rating of the informant despite being a new channel and disruption in signals showed a growth during the transmission period. The TRP rating was ranging between 3 to 7 which was almost equal to some other channels.

4.18 Based upon facts gathered during investigation and examination of the parties concerned, DG has submitted that except for the informant in none of the cases, termination of agreement on the basis of mid-term review of popularity has been done by the OP group. This shows that there is no practice or system of termination on the basis of performance or popularity of the channel.

4.19 Further, as per the submissions made by the informant, deliberate disruption in the telecast of news channel by the OPs in the entire state also resulted in low TRP as the viewers would not like to watch a channel with bad picture or sound quality. This is substantiated based upon copies/transcripts of feedback from various viewers and also from the fact that the informant also addressed letters to various authorities including the Minister for Information & Broadcasting, Government of India, Chief Minister of Punjab, Chief Secretary, Government of Punjab, District Magistrate, Jalandhar highlighting the conduct of OPs regarding disruption in the transmission of the channel ‘Day & Night’.

4.20 On the basis of aforesaid evidences, DG has concluded that it is established that there was regular disruption in the telecast of the channel. The argument of OPs that the disruption was technical and was only on two occasions has not been substantiated by way of any evidence on record.

4.21 As per the DG, the circumstances of the case and the chain of events confirm that the channel of informant was regularly disrupted between October 2010 and January 2011 deliberately by the OP group. The informant had provided 13 set top boxes at different control rooms of OP located in different cities and it was not possible that technical faults in all the cities on same time occurred on the transmission of its channel. This shows that the disruption in transmission of channels was deliberate.

4.22 According to DG, the disruption in the transmission of the Informants and its eventual termination is manifestation of abuse of dominant position of the Opposite Parties group. DG has submitted that the OP has tried to take shelter of the TRAI regulations by arguing that “Fastway is not bound by a “must carry” as against the informant who is bound by a “must provide” provision. However, the intent of the regulation was to safeguard small MSOs from the dependency on broadcasters and to ensure the telecast of programs to the consumers in all the areas. But when the MSO becomes dominant and start charging the placement fee for shortage of spectrum or supply, the scenario becomes different. The conduct of the OP group shows that it wanted to impose its condition on the informant on account of its dominant position. The act of OP group was unilateral to terminate the transmission of the channel of the informant.

4.23 DG has also submitted that the OPs, due to their dominant position, are operating in the relevant market with ‘take it’ or ‘leave it’ conditions while dealing with the stakeholders in the relevant market. The conduct of OP has resulted in huge loss to the broadcaster (the informant) as well as denial of services to the consumers who want to watch the channel of the informant. As on date the informant has access to only 56,000 household on the cable TV in the state of Punjab & Chandigarh where about 45 lac households are connected to the cable network. Thus, the informant has been effectively wiped out from the entire relevant market by the conduct of OPs.

4.24 According to DG, on the other hand, the informant in the state of Haryana, where the OPs are not in a dominant position has access to 16.91 lac subscribers through cable TV network. WWIL is transmitting the channel of informant in Haryana where its operational control is not granted to the Fastway group. It proves that the decision to deny the access on the network of WWIL was of the Fastway group in Punjab. The network of WWIL in Haryana is very well available to the informant as there is no dominance of the Fastway group there. This proves that the Fastway group by virtue of its dominant position in the state of Punjab has ability to affect not only the broadcasters but also the competitors like WWIL and control the relevant market in its favour.

4.25 In the light of the aforesaid facts and circumstances of the case, DG has reported that the abuse of dominant position against the Informant in violation of the provisions of Competition Act gets established.

4.26 DG has also reported that the ICC World Cup 2011 broadcasted by ESPN was not transmitted by the Fastway group on their network. The entire viewers of the relevant market were deprived of an important event telecasted by ESPN. The ESPN in its petition before the TDSAT also alleged that the Fastway has a monopoly in the market of Punjab. The TDSAT while adjudicating the case has decided the case in favour of ESPN and directed the OPs to pay Rs. 27,321,376 along with interest.

4.27 DG has concluded that, it is evident from the aforesaid that the Fastway group is abusing its dominance in the relevant market and imposing discriminatory condition on the stakeholders. The conduct of OPs in case of ESPN also confirms its monopolistic abuse in the relevant market.

4.28 According to DG, the conduct of the OP group has not only resulted in harm to the consumers but also to the TV industry as a whole by depriving the access to the relevant market.

4.29 DG has also analysed the conduct of the OPs against the competing MSOs and has submitted that Fastway group has not only gained dominance in the relevant market but also has destroyed the competition from the relevant market. After its entry in the market in 2008-09, it is evident that the whole market scenario of cable TV in the state of Punjab has changed in their favour. Before its entry, there were two major players viz Heathway Sukhamrit (controlled by Heathway Datacom at that time) and WWIL. Both of these companies were enjoying having almost equal shares in the state of Punjab. However, after the entry of Fastway both of them started losing their market share and incurring loss. The Fastway, in such circumstances first acquired the control of Heathway and Gurdeep Singh took control of its operation. Subsequent to this, the WWIL was forced to handover the control of its cable operation to the Opposite Group in Punjab.

4.30 DG has submitted that the conduct of Fastway group clearly shows that it has eliminated the competition from the relevant market and affected the market in its favour. At present, there is no MSO operator in the relevant market who can pose any competition to the Fastway group. Although at present there are about 20 small MSOs who are operating in small pockets of one or two districts, some of them are operating in the cantonment areas or hotels with the subscriber base of about 500 to 10,000 each. There is no competition to the Fastway group who has a total subscriber base of about 40 lac in the relevant market whereas, the combined number of subscribers of all the remaining MSOs would not be more than 2 lac. According to DG, the relevant market is thus entirely controlled by the Fastway group and it has eliminated free and fair competition from the market.

4.31 As per DG, the abovementioned facts establish that the Fastway group has completely eliminated the competition in the relevant market to affect the stakeholders in its favour by abusing of its dominant position. DG has also analysed the conduct of the OPs against the LCOs and reported that some of the LCOs of Jalandhar have submitted written submission and affidavit mentioning the unfair practices of the OPs. It is alleged by these LCOs that these MSOs are charging unreasonable prices due to their monopoly. They are dictating the terms to LCOs due to their monopoly. It is stated that they have pressurized to increase their share by 15% in August 2011 and again pressurizing to increase it by 22% which is violation of TRAI regulations. The agreements prepared by MSOs is heavily tilted in their favour. It is also stated that the copies of agreements are not given to the LCOs to avoid any documentary evidences. The channels run by them are not based on consumers demand but as per their business and personal whims. They are also trying to eliminate the local cable operators out of the market by disrupting their transmission to allow entry to their firms. The LCOs also agitated against the OPs on such practices.

4.32 On the basis of the aforesaids, DG has submitted that Fastway group is dictating its terms and conditions on the LCOs and also causing harm to the consumers. The evidences submitted by the LCOs prove the abuse of dominant position by the Fastway group.

4.33 Based upon the findings of investigation, DG has concluded that the conduct of the Fastway group is found to be in violation of the provisions of section 4(2)(a), 4(2)(b)(i) and 4(2)(c) of the Act. As per DG, conduct and practices reflecting abuse of dominance of the group is as under:

(a)  The Fastway group has gained control over the relevant market by eliminating the competition and competitors either by acquiring their business or by taking the control of their business in its hand.

(b)  It has affected the competitors, consumers and relevant market in its favour by virtue of its dominant position.

(c)  It has abused its dominant position by refusing to deal and supply to the broadcaster on its network, if they do not accept its unreasonable conditions.

(d)  It is imposing unfair and discriminatory conditions on the broadcasters for transmission of their channel in the relevant market in violation of section 4(2)(a)(i).

(e)  It has forced the broadcasters to reduce their prices or leave the relevant market which is contravention of section 4(2)(a)(ii) of the Act.

(f)  It is also charging placement fee from broadcasters for allowing their channel on its network on account of its dominant position.

(g)  The OP group has abused its dominance by limiting and restricting the provision of services in cable TV for the broadcasters and consumers in violation of the provisions of section 4(2)(b) (i) of the Competition Act.

(h)  It has also affected the consumer’s choice by eliminating the competition. The consumers have no alternative in the relevant market. The non-transmission of ESPN and Day & Night news is one of the examples of such conduct.

(i)  Its practices as narrated supra have resulted in denial of market access to the broadcasters and other stakeholders. The informant and other channels have been affected by such practices which is contravention of the provisions of section 4(2)(c) of the Act.

(j)  It has also abused its dominant position against the LCOs by imposing its unfair conditions on them.

5. The Commission considered the investigation report of DG in its meeting held on 07.03.2012 and decided to send a copy of the DG report to the informant as well as to all the Opposite Parties for inviting their comments/objections, if any. The Opposite Parties (except OP 4) submitted their replies/objections in response to the report of DG. The replies/submissions of each of the Opposite Parties, in brief, are as follow:

5.1 Reply of Fast Way Communication Pvt. Ltd. (OP 1)

5.1.1 The OP-1 in its reply has stated that the approach and understanding of DG about the various platforms/modalities of transmission of TV signals is faulty and wrong. DG has failed to understand the system of business operations of the Opposite Parties and existence of stiff competition within the trade.

5.1.2 As per OP 1, it is an MSO and is engaged in the activity of signal distribution of TV channels. Multi operating system is one of the technology through which signals are taken to view various channels on TV. There are many modalities which are competing with each other for the distribution of TV channel signal such as DTH, IPTV, HITS etc. All these modalities are put under one category of trade known as ‘transmission platforms’. For TV viewers the purpose and utility of all transmission platforms is one and the same. Viewers often substitute and interchange one platform in place of other. Thus, there exists cut throat competition amongst various transmission platforms.

5.1.3 As per the OP 1, intense competition among DTH operators is affecting profitability of Cable TV service. With a strong subscriber base, DTH service providers are gaining bargaining power to reduce their prices. Agreements with broadcasters usually have clauses that de-escalate per-subscriber cost for DTH operators as subscriber number milestones are reached. Players such as Dish TV have reduced content costs from 60 percent of its subscription revenues in 2009 to around 40 per cent in 2011. This is more in line with the content costs of international DTH operators and ranges from 35 percent to 53 percent of total revenues.

5.1.4 It has been submitted by OP 1 that competition in the cable TV business is twofold i.e. among the MSO themselves and MSO with DTH operators. Prominent MSOs have large networks and have their presence across the nation. They include Asian net, Den networks, Digicable, Hathway Datacom, Induslnd Media and Communications, KAL Cables (Sumangali), Ortel and Wire and Wireless India (WWIL). There are also regional and state MSOs. In India there are around 6000 MSOs and 55,000 LCOs which are operating.

5.1.5 It has been replied by OP 1 that currently cable TV transmission in India is predominantly based on Analog technology which suffers from various limitations such as capacity to carry limited channels, frequent disturbances, imperfect clarity, etc. With stiff competition from advanced distribution technologies such as DTH, head end-in-the-sky (HITS), IPTV, broadband and telephone services, the local cable TV operators find it difficult to sustain in the business.

5.1.6 The OP 1 has submitted that MSOs and DTH companies are facing competition from each other. With a view to compete with DTH players, MSOs are upgrading their networks and adding competitive services and offering popular local content to viewers. As per OP 1, there are five major MSOs in this segment having national presence. These are Raheja group’s Hathway Cable & Datacom, the Essel Group’s Wire & Wireless India (WWIL), the Hinduja Group’s Induslnd Media, DEN Digital Entertainment Network (set up by GBN founder Sameer Manchanda and Network 18 chief Raghav Bahl) and Digicable Network India (set up by Jagjit Singh Kohli). These five collectively access over 20 million subscribers i.e., a quarter of the country’s cable TV subscribers.

5.1.7 The OP 1 has replied that competition in the cable TV segment is intensifying as the battle over acquiring the LCOs by MSOs continues. New players like Asia Net and You Telecom are also entering the fray. You Telecom is said to have committed Rs. 120 crore towards its digital cable business expansion.

5.1.8 It has been submitted that consolidation in the industry is attracting the attention of private equity players as the scattered cable TV operators come together to form meaningful corporate entities. As per TRAI report dated 05.08.2010, the MSO industry is said to be investing close to Rs. 30,000 crore to Rs. 50,000 crore on digitization. Further, the move to digitization could potentially impact an estimated 78 million cable homes, 60,000 LCOs, over 200 broadcasters and more than 6000 cable MSOs in the country.

5.1.9 As per OP 1 the cable companies cannot compete with DTH players as they are pumping much more money for the purposes of advertising. DTH operators are deep pocketed, mostly owned by broadcasting or telecom companies, operating total digital networks since 2003 and have millions of subscribers on a single network as against small networks of MSOs/Cable operators having a few thousand connections.

5.1.10 According to OP 1 with the entry of new players like Digicable, Digital Entertainment Networks (DEN) and You Telecom in cable TV business, the competition in the sector has become even stiffer. The three new players have together pumped an estimated Rs. 1000 crore in the cable industry in the past one year. Due to tough competition, MSOs and cable operators, to maintain their customers, are promoting digital cable by offering 30% to 40% cheaper rate than the DTH operators.

5.1.11 The OP-1 has further submitted that MSOs and cable operators have been pushing digital cable through set-top-boxes at attractive prices so as to convert several analog consumers into digital cable consumers. MSOs are offering digital cable with set-top-boxes for as low as Rs. 500 and the monthly subscription amounts to Rs. 200-250 depending on the region where the customer is located.

5.1.12 The OP 1 has further submitted that the subscriber base for DTH in 2006 was meagre 1 million as against total 125 million TV subscribers. In 2010 total DTH subscribers were close to 32 million. Thus, DTH has a market share of approximately 20%. The number of DTH subscribers is estimated to increase at a CAGR of 18 per cent. The turnover of large six players in DTH in 2010 was 23 billion which is likely to grow to Rs. 92 billion by 2012. Further, DTH players are rapidly expanding their operation even into rural areas, which MSOs find it difficult to reach. DTH players are aggressively promoting their services in rural India, customizing their channel packages, prices and marketing strategies to appeal to small town TV viewers. It is estimated that rural areas and small towns accounted for around 76 percent of all DTH subscribers India in 2010, driven largely by choice of channels, enhanced picture and sound quality.

5.1.13 As per OP 1, DTH penetration is rapidly spreading across the country due to its reach, service offered, viewing quality, additional channel compared to cable and increased flexibility to select channels. DTH operators are likely to garner 70 per cent of the incremental digitalization market share. Therefore, finding of DG that DTH is for a rich & urban class and cable TV for poor & semi urban and rural areas is wrong.

5.1.14 It has been submitted by OP 1 that the price differences between digital cable, DTH and IPTV is not significant. DTH is now-a-days offering packages ranging from Rs. 100 to Rs. 250. The cable charges also ranges from Rs. 80 to Rs. 200 per connection. The price difference is largely because DTH operators are unable to avoid the taxes where the cable operators are able to do so by under reporting the subscribers. There are taxes such as service tax, license fees, excise duty, VAT and entertainment tax which compromises almost 56% of their revenues. Cable operators find ways to evade these taxes and give benefit to their subscribers by charging lesser prices. After digitalization of cable network, such evasion of tax is not possible and the prices will increase as that of DTH operators.

5.1.15 As per OP 1, DG has established that there is a particular set of consumers who prefer cable TV because its price is lower. However, this is not the reality. Practical data shows that the subscribers do not distinguish between the available alternatives on the basis of its price. DTH has not created any separate group of consumer but has taken the subscribers of cable TV by offering a substitute of cable TV with better quality and service.

5.1.16 It has also been submitted by OP 1 that DTH is rapidly spreading across the country due to its reach, service offered, viewing quality, additional channels compared to cable and the increased flexibly to select channels. DTH operators are likely to garner 70 per cent of incremental digitations market share.

5.1.17 The OP 1, referring to the Telecom Regulatory Authority of India’s (TRAI) recommendations on implementation of Digital Addressable Cable TV System, has stated that in India Terrestrial, Cable, DTH and, IPTV are treated as same distribution platforms as all of them have to use Conditional Access System (CAS).

5.1.18 In view of aforesaid discussion of the competitive nature of transmission platforms of TV channel market, OP 1 has objected to the findings of DG as regards delineation of relevant product market and relevant geographic market, dominance and abuse of dominance by Fast Way group in the said market.

5.1.19 According to OP-1, the DG, while defining relevant market, has very conveniently ignored the said objective and isolated the transmission services of cable TV from all other modes of transmission which are interchangeable and substitutable by the consumers. As per OP 1, effective competition is subject to three main constraints viz; demand substitutability, supply substitutability and potential competition. DG has ignored all these aspects while delineating the relevant market in the case.

5.1.20 As per OP 1, taking all economic factors into consideration which the DG has totally ignored, the activity of transmission of TV signals by any modalities is one and the same product and constitutes the relevant product market within the meaning of section 2(t) of the Act. All these modalities such as cable TV, DTH, HITS and IPTV are evolvement of the technology in a phased manner and are competing and substituting the old technology with new technology. DG has further given a wrong finding that the interchangeability between DTH and cable from consumer or subscriber side is found to be negligible which is contrary to statistical data.

5.1.21 It has also been submitted by OP 1 that DG while delineating the relevant market has not used any economic or econometric test such as SSNIP test, Critical Loss Analysis test etc. as per international practice.

5.1.22 With regard to relevant geographic market definition given by DG, it has been submitted by OP 1 that there are no regulatory barriers to limit any particular geographic relevant market in the present case. The licenses are granted to operate all over India. Thus, DG’s finding that the geographical market in the case happens to be the state of Punjab and Union Territory of Chandigarh is incorrect since the correct relevant market it should be the territory of entire India.

5.1.23 The OP 1 has submitted that it is not in dominant position in the relevant market as stated by DG in his report. It does not enjoy any position of strength in the relevant market in India which enables it to operate independent of the competitive forces prevailing in the market or to affect its competitors or consumers or the relevant market in its favour. Its position is greatly affected by mere change in the policy of the competitors such as DTH, HITS and IPTV operators. None of the Opposite Parties have any control over the price or the consumers or the competitors.

5.1.24 As per OP 1, the approach of DG has not been free and fair but is motivated, predetermined and biased. In cases of dominance; market definition remains a crucial part of investigation since the competition authority will have to establish that the undertaking holds a dominant position in the relevant market in order to consider whether an abuse has taken place. As per OP 1 it is not in a dominant position in the relevant market. Therefore, report of DG and its findings as to the dominant position of OP 1 have to be summarily dismissed.

5.1.25 The OP 1 has submitted that analysis of abuse of dominance involves two aspects, one determining status of the firm as dominant and then examining conduct of dominant firm as abusive. It has been submitted that OP 1 along with other Opposite Parties do not enjoy the position of dominance in the market. Thus, there is no question of examination of its conduct as abusive. Further, dominance, by itself, is not presumed to be offensive by most competition authorities.

5.1.26 As per OP 1, it is essential to ensure that the application of provisions of competition law does not curb the ideals of efficiency and productivity. It has been submitted by OP 1 that in no case it has imposed unfair or discriminatory price or condition on any broadcasters, including the informant. There is no allegation or any complaint or finding that OP 1 has charged the price which is above the competitive price. Thus, the findings of DG against OP 1 have been misconceived and are not applicable.

5.1.27 Further, the Commission while making order u/s 26(1) did not find any violation of this provision. However, DG has wrongly applied the provision and enlarged the scope of investigation.

5.1.28 Contrary to the findings of DG, OP 1 has submitted that it has not limited the provision of services. The alleged conduct of breach of agreement on the part of OP 1 cannot be termed as limiting production or scientific development to the prejudice of the consumers and thereby interfering with the forces of competition in the market. Breach of agreement/understanding with the informant, if any, was for commercial and economic reasons. The Opposite Parties are known for having taken steps to enhance the provision of services by taking steps to digitalize its network to accommodate more and more channels and to overcome the shortcoming of earlier technology which could at the most accommodate only a specific number of channels. As per OP 1, DG has totally ignored this vital fact during the course of investigation.

5.1.29 It has been submitted that since the informant’s channel is new, OP 1 initially was hesitant to re-transmit the same with apprehension that the viewers may not appreciate it. As per OP 1, it had the limitation to carry maximum 50-55 channels in its cable network out of about 450 channels because of technological limitations. Despite this it accommodated the channel of the informant in its cable network.

5.1.30 As per OP 1, DG deliberately has not filed the complete report of the TRAI in its report which acknowledges that there is a huge spectrum constraint. Further, as per TRAI regulations there is no compulsion on the part of MSOs to distribute all the channels of the broadcasters.

5.1.31 As per OP 1, the end users/viewers decide the channels that they would like to watch and not the MSOs. In the event of majority of end users/viewers wish to watch the informant’s channels, there is no way it could block the same. It has been submitted by OP 1 that the channel of the informant is not in much demand by the viewers.

5.1.32 It has been submitted by OP 1 that to raise the number of viewers and to popularize its channel, the informant started making false allegations and defaming it in media. As per OP 1, it is not patronizing any particular political party and carries all kind of news. It has been also stated that the informant is making false allegations against it for causing disruption in transmissions of signal of the informant channel, which is not correct. At two occasions it happened and it happens with all the channels because of many technical problems. It is not necessary that the technical difficulty could be only from the MSO side, it could be from broadcaster’s side also.

5.1.33 The OP 1 has further stated that it has not denied the market access to the informant in any manner and never refused to deal with the informant. The present case at the most can be referred as a case for breach of agreement. A breach of agreement and refusal to deal are two distinct and separate acts. Therefore, informant’s allegations do not fit to the said provision. Moreover, the act of refusal to deal will amount to an anti-competitive agreement, only when such refusal to deal impairs competition in India and not in a relevant market as per section 3(4) of the Act.

5.1.34 On the allegations of abuse of its dominant position at the time of ICC World Cup, the OP-1 has clarified that television rights of the Cricket World Cup -2011 was with ESPN. But the payout fee of ESPN was kept much higher than its usual price which was not viable for OP 1 to re-transmit. It was also not is a position to raise the corresponding hike in the subscription fees from the LCOs. The adamant attitude and arm twisting tactics of ESPN forced OP 1 to leave the deal.

5.1.35 The OP 1 has submitted that the grievance of the informant has already been decided by competent court. The informant has already availed the remedy in law for breach of agreement up to the Supreme Court of India and none of the courts found any ground to mandate OP 1 to transmit the signals of the informant channel through its network. Both the High Court of Punjab & Haryana and the Supreme Court of India did not find any merit in the informant’s petition and refused to grant him any relief. The matter is also presently being heard by the TDSAT.

5.1.36 As per OP 1, the informant invoked the jurisdiction of the Commission by suppressing the orders of the High Court and Supreme Court and the fact that the matter is subjudice with TDSAT.

5.1.37 The OP-1 has submitted that there is no appreciable adverse effect on competition in markets because of its alleged conducts. The report of DG also has not accused it for causing any adverse effect on competition in India. DG in his report has alleged that by refusing and denying the service to the informant, the Opposite Parties have affected competition in the state of Punjab and UT Chandigarh. The OP 1 has denied and disputed such allegation and submitted that no competition has been effected even in Punjab. Therefore, the essentials of anti-competitive agreement i.e. appreciable adverse effect on competition in India and not (any particular market) are missing in the present case.

5.1.38 The OP 1 also questioned the jurisdiction of the Commission in the matter. As per OP 1, the allegations of the informant pertains to a dispute between MSO and broadcaster which falls within the exclusive domain of TDSAT and as such the present case not being a dispute among two competitors or buyer and seller, the Commission has no jurisdiction over the subject matter.

5.1.39 The OP-1 vide letter dated 22.05.2010 further informed the Commission that there was no requirement for any licence from any authority for an MSO working with analog system and thus there is no licence with it. The permission for an MSO is required under Rule-11 of Cable Television Network services if the cable television network services are provided with addressable systems in any one or more notified areas. Since this is not the case applicable with OP-1, no such permission is required.

5.1.40 As regards DTH connections, it was reported by OP-1 that in June 2011 the total number of such connections in Punjab is 790550. However, this figure does not include DTH connections installed by DD direct. The expected DD direct DTH connections in Punjab are more than Ten Lac. It has also been submitted that the figures of Opposite Parties-1 and its allied includes the subscribers of not only analog but also digitalised cables that it has been undertaking.

5.2 M/s Hathway Sukhamrit Cable & Datacom Pvt. Ltd. (OP 2)

5.2.1 The OP 2 in its reply has submitted that the TV channel transmission market in India is very dynamic and competitive where DTH operators are not only vigorously competing with each other but are also competing with the cable TV operators.

5.2.2 The OP 2 has objected to the market definition given by DG. It has been submitted that effective competition is subject to three main constraints such as; demand substitutability, supply substitutability and potential competition. DG has ignored all these aspects while delineating the relevant market in the case. As per OP 2, the activity of transmission of TV signals by any modalities such as cable TV, DTH, HITS and IPTV is one and the same product and constitutes the relevant product market as per the Act. All these modalities are evolvement of technology in a phase manner and competing and substituting and outdating and replacing the old technology with new technology. It has also been submitted by OP 2 that DG while delineating the relevant market has not used any economic test such as SSNIP test. Critical Loss Analysis test etc.

5.2.3 According to OP 2, relevant geographic market in this case should be the territory of whole India not the territory of Punjab as defined by DG in his report. It has been submitted that there are no regulatory barriers to limit any particular geographic relevant market in the present case. The licenses are granted to operate all over India, not in a particular state.

5.2.4 The OP 2 has further submitted that it is not in dominant position in the relevant market as found by DG. It has been submitted that OP 2 and its allies have no ability to prevent effective competition and/or ability to behave independently of two sets of market actors such as competitors and consumers. DG has also failed to comprehend the position of strength of OP 2 and thereby has come to a wrong finding to the effect. Thus, report of DG and its findings as to the dominant position of OP 2 have to be summarily dismissed.

5.2.5 It has been submitted by OP 2 that its market size in India is negligible and even in North India it is not significant. Total numbers of viewers in India are estimated to be 130 million out of which share of OP 2 and its allies is very small. There are nine major MSOs and 7 DTH players operating in India who command major market of TV viewers. Rest of the market is divided between remaining regional and state MSOs whose number stands as large as 6000.The size and influence of the competitors in the market is multifold.

5.2.6 The OP 2 and its allies have no commercial advantage over their competitors and in fact are under constant pressure and competitive strain of their better services and low price. OP 2 and its allies cannot think and dare to raise their price for their service in the market and if they do so, they would lose their consumer and get vanished from the market.

5.2.7 The OP 2, individually or along with OP 1, has no ability to prevent effective competition and/or ability to behave independently. DG has also failed to comprehend the position of strength of OP 2 and thereby has come to a wrong finding to the effect that it is a dominant player.

5.2.8 The OP 2 has submitted that it has not violated the provision of section 4(2)(a) of the Act as it has not imposed any unfair or discriminatory price or condition in purchase or sale service. There is no allegation or finding that OP 2 has charged price which is above the competitive price. It has also been submitted by OP 2 that the Commission while making order u/s 26(1) did not find any violation of this provision. However, DG has wrongly accused and misapplied the provision and enlarged the scope of investigation.

5.2.9 According to OP-2 alleged breach of agreement cannot be construed as limiting production to the prejudice of the consumers and thereby interfering with the forces of competition in the market. On the contrary, the Opposite Parties are known for having taken the steps to enhance the provision of services. OP 2 has taken steps within its available resources to improve its network and thereby, to become more competitive in the market. As per OP 2 DG has totally ignored this vital fact in its report.

5.2.10 It has been submitted that the response from end users/viewers to the informant’s channel was not encouraging. In order to raise number of viewers and to popularize its channel, the informant started making false allegation and started defaming OP 1 and OP 5 in media so that viewers get attracted to its new channel.

5.2.11 The OP 2 has submitted that it has not denied the market access to the informant in any manner. The grievance of the informant is refusal to deal by way of termination of his agreement. However, refusal to deal does not necessary result into denial of market access. It has been stated that the informant is not dependent on OP 2 for the transmission of its news channel. The informant has access to all platforms of the transmission of TV signals of his news channel. Therefore, it cannot be said that the termination of the agreement/understanding amounts to denial of the access of the market for the informant.

5.2.12 According to OP-2 it has not refused to deal with the informant. The present case at the most can be referred as a case for breach of agreement. A breach of agreement and refusal to deal are two distinct and separate acts. As per OP 2, breach of agreement/understanding with the informant, if any, was for commercial and economic reasons. Further, refusal to deal under section 3(4)(d) of the Act does not deal with individual grievances but deal with the persons or class of persons who ought to be denied the access of the service. Moreover, the act of refusal to deal will amount to an anti-competitive agreement only when such refusal to deal impairs the competition in India and not in a relevant market as per the provisions of section 3(4) of the Act.

5.2.13 With regards to findings of DG on cartelization it has been submitted by OP that it is of small economic strength and has total share capital of mere Rs. 14.52 lakh. The transmission platform via cable is dying industry and facing a great challenge from other competitors. Even the statutory guidelines has mandated the Opposite Parties to upgrade their system and make the same digital within a specified time frame work for the interest of the consumers and resolve the disputes of the broadcasters and to protect the siphoning off the government revenue.

5.2.14 According to OP-2 it is not possible for any of the Opposite Parties in their individual capacity to upgrade the analog technology to digital technology without making huge investment. Therefore, Opposite Parties have come together to increase efficiency in production, supply, distribution and provision of the service. It has been submitted that cartelization presupposes the fact that there is an agreement between competing enterprises not to compete or restrict competition. This is clearly not the case in the present instance. The objective of a cartel is to raise price above competitive levels, resulting in either loss to customers or to the economy. For the consumers, cartelization results in higher prices, poor quality and less or no choices for goods or/and services. As per OP- 2, there is not a single instance demonstrated by the informant about any actual or potential loss caused to the customer or to the economy because of the said cartelization.

5.2.15 It has been submitted that OP 2 and its allies do not enjoy dominant status in the market. Thus, there is no case for any examination of their conduct as abusive. The informant is not dependent on OP 2 for transmission of its news channel. There are sufficient materials available on record to show that the informant has access to all platforms of the transmission of TV signals of his news channel but the DG has not discussed the same in its report. Therefore, it cannot be said that the termination of the agreement/understanding in the present case amounts to denial of the access of market to the informant.

5.2.16 As per OP 2, the allegations in the present case pertain to a dispute between MSO and broadcaster which falls within the exclusive domain of TDSAT and as such the present case not being a dispute among two competitors or buyer and seller, or two competitors. Thus, the Commission has no jurisdiction over the subject matter.

5.2.17 The OP 2 has submitted that the report of DG is controversial and devoid of merits and wrongly implicated and dragged OP2 into the domain of enquiry. The investigation of DG needs a scrutiny of the detailed evidence. OP 2 also averred that it will like to lead evidence and cross examine DG and his witnesses for which an adequate and reasonable opportunity be given to it.

5.3 M/s Creative Cable Network Pvt. Ltd. (OP 3)

5.3.1 The OP 3 in its replies submitted that DG has defined the relevant market wrongly and has not used econometric techniques while defining relevant market. As per OP 3, the activity of transmission of TV signals by any modalities is one and the same which constitutes the relevant product market in the present case. There are many modalities of transmission of TV channels with different technology which are competing each other such as DTH, IPTV, HITS, etc. All these modalities are known as ”transmission platform” and for the TV viewers, all these modalities is one and the same. Viewers often substitute and interchange between these transmission platforms. There is cut throat competition amongst the various modalities and the players within the same modality.

5.3.2 The OP-3 has submitted that DG has very conveniently isolated the transmission services of OP 3 from all other interchangeable and substitutable services and further narrowed down the product market to justify the report and has thrown all economic consideration for defining the market in the present case. As per OP 3, the decisive test for determining a product market is assessing interchangeability or substitutability. Transmission of TV signals through cable is interchangeable and substituted by DTH and IPTV as they have almost the same physical characteristics, nature and end use. Further, DTH, IPTV as well as digital cable are transmitted through Conditional Access System.

5.3.3 With regard to relevant geographic market, it has been submitted by OP 3 that in case of distribution platform of TV signals, the geographical market is whole of India but DG has wrongly taken the geographical market as the state of Punjab. The transmission of TV signals could be across India without incurring any additional expenses. Therefore, scope of the geographic market has to be whole of India. With the latest guidelines of TRAI for compulsory digitalization of cable operation, MSOs have no trade barrier. They can operate at national level. MSOs are creating all India branding for their services. There is no local specification requirement for any MSO in view of the changing scenario.

5.3.4 Further, due to the dynamism in today’s service sector, especially in innovation driven markets characterized by ongoing technological progress, longer-term competitive constraints often come from potential competitors that are not currently in the market. Therefore, in case of distribution platform of TV signals, the geographical market is national boundary and growing to be global. For all these reasons, DG’s finding that geographical market is the territory of Punjab is wrong and should be rejected.

5.3.5 As per OP 3, findings of DG as to its dominant position have to be summarily dismissed for failure to plead a valid relevant product market and further to identify the relevant geographical market. DG has also failed to comprehend the position of strength of OP 3 and thereby come to a wrong finding to the effect. Further, OP3 either in its individual capacity or as a group does not enjoy any position of strength in the relevant market in India which enables it to operate independently of the competitive forces prevailing in the market or to effect its competitors or consumers or the relevant market in its favour. The position of OP 3 is greatly affected by mere change in the policy of the competitors such as DTH, HITS, and IPTV etc. None of the Opposite Parties has any control over the price or the consumers or the competitors.

5.3.6 Contrary to findings of DG, OP 3 has stated that it has not imposed any unfair and discriminatory price in purchase or sale of the relevant product which is anti-competitive Section 4(2) (a) of the Act. It has been stated that this provision of the Act gets attracted when a dominant firm harms consumers by either charging higher prices than the prevalent competitive rates and/or by significantly reducing the quantity supplied to the market. There is no allegation or any complaint or finding that OP 3 has charged the price above competitive rates as a condition for purchase and sale of the services. Thus, the provision against OP 3 has been misconceived and is not applicable.

5.3.7 According to OP 3, findings of DG that it has limited the provision of cable TV services which is anti-competitive as per the provisions of section 4(2) (b) of the Act needs to be discarded. It has been submitted that the alleged conduct of breach of agreement on the part of OP 3 cannot be termed as limiting production and thereby interfering with the forces of competition in the market. Breach of agreement/understanding with the informant, if any, was for commercial reason and to safeguard the business interest of OP 3.

5.3.8 The OP 3 has also objected the findings of DG that it denied the market access to the informant since it has enough access to the market because of presence of other platforms of transmission of TV channels.

5.3.9 As per OP 3, it has not been involved in any cartelization with other Opposite Parties. It has been submitted that DG has found that the Opposite Parties have acted as an association of the enterprises and formed a cartel and thereby seriously affected competition by denying the informant to re-transmit its channel in the state of the Punjab and Union Territory of Chandigarh. It has been submitted by OP 3 that its economic strength is very meagre and has total share capital of mere Rs. 2.5 lakh.

5.3.10 According to OP 3, the transmission platform through cable network facing a great challenge from other competitors who are equipped with better technology and enjoying huge Foreign Direct Investment. It is not possible for any of the Opposite Parties in their individual capacity to upgrade the analog technology to digital technology without making huge investment. Therefore, Opposite Parties have come together to increase efficiency in production supply, distribution and provision of the service.

5.3.11 The OP-3 has further submitted that it does not enjoy the dominant status in the market and therefore there is no question of any examination of their abusive conduct. The informant is not dependent on the Opposite Parties for the transmission of its news channel. The informant has access to all platforms of the transmission of TV signals but DG has not discussed the same in his report. Therefore, it cannot be said that the termination of the agreement in the present case amounts to denial of market access to the Informant.

5.3.12 The OP 3 has further submitted that the present case is a dispute between MSO and broadcaster which falls within the exclusive domain of TDSAT. Since the present case is not a dispute between two competitors or buyer and seller, the Commission has no jurisdiction over the matter. The OP 3 has further submitted that DG’s report is controversial and devoid of merits and has wrongly implicated and dragged OP 3 into the domain enquiry. Therefore, the Commission should reject the DG report and take its own decision on the basis of merits of the case.

5.4 Reply of OP-4

5.4.1 The OP-4 did not file any reply even when given opportunity to do so.

5.5. Shri Gurdeep Singh (OP- 5)

5.5.1 The submissions and arguments put forth by OP 5 to discard DG findings are almost same that of the submissions made by OP 1, OP 2, and OP 3.

5.5.2 The OP-5 has submitted that he has not run any business of cable TV or owns any transmission platform. As per OP-5, he owns a shareholding of Rs. 1.02 crore in OP 1, shareholding of Rs. 7.40 lakh in OP 2 and shareholding of Rs. 2.49 Lakh in OP 3. He does not hold any share of OP 4.

5.5.3 The OP 5 has denied all allegations raised by the informant in the information as well as in the DG’s report. According to OP 5, the TV subscription market is very dynamic and competitive where not only DTH operators are vigorously competing with each other but also competing with cable TV operators. Therefore, allegation of dominance of the Opposite Parties cannot be established. In absence of dominance, the question of any abuse, including predatory pricing, does not arise.

5.5.4 The OP 5 has also objected to the market definition given by DG in his report. As per OP 5, the relevant product market in the present case should be all platforms of transmission of TV channels including DTH, IPTV, Cable TV, etc. and relevant geographic market should be the whole territory of India.

5.5.5 The OP 5 has discarded the findings of DG that Opposite Parties, as a group, are in a dominant position. It has been submitted that OP 5 and its allies have no ability to prevent effective competition and ability to behave independently. DG has also failed to comprehend the position of strength of OP 5 and thereby has come to a wrong finding to the effect.

5.5.6 It has been submitted by OP 5 that Opposite Parties either in their individual capacity or as a group do not enjoy any position of strength in the relevant market in India which enables them to operate independent of the competitive forces prevailing in the market or to effect its competitors or consumers or the relevant market in its favour.

5.5.7 The OP 5 has also rejected the findings of DG that the Opposite Parties have imposed unfair conditions or charged unfair price from the consumers. He also denied that the Opposite Parties have limited the provision of cable TV services by terminating the Channel Placement Agreement with the informant. As per OP 5, such act is a breach of agreement between the Opposite Parties and the informant. The OP 5 further submitted that the Opposite Parties have not denied market access to the informant or to the consumers and also have not refused to deal with the informant. The findings of DG in this regard are wrong and should be rejected by the Commission while taking any decision in the matter.

5.5.8 With regards to findings of DG on cartelization among the Opposite Party, OP 5 has denied that any of the Opposite Parties is involved in any cartel so as to limit the provision of cable TV services. As per OP 5, the objective of a cartel is to raise price above competitive levels, resulting in either injury and/or loss to customers and to the economy. For the consumers cartelization results in higher prices, poor quality and less or no choices of goods or/and services. However, in the present case there is not a single instance stated by the informant or by DG about any actual or potential loss caused to the customer.

5.5.9 The OP 5 has submitted that DG report is controversial and devoid of merits and he has been wrongly implicated and dragged into the enquiry.

5.5.10 On the basis of above submissions OP 5 requested the Commission to reject the findings of DG.

5.5.11 In response to the report of DG, the informant has submitted its reply to the Commission on 17.03.2012 wherein it has been stated that it has no comments or objections to offer to the findings of DG since the report of DG has taken its concerns, as submitted in the information.

6. Decision of the Commission

6.1 The Commission has carefully considered the information, replies of various parties and material available on record to arrive at the decision in the matter. Having analysed the facts involved and allegations raised by the informant in the matter, the Commission notes that the following issues arise for determination in the case:

Issue 1: Under the facts and circumstances of the case what ought to be the relevant market in the case?

Issue 2: Whether the Opposite Parties are dominant in the relevant market? If so,

Issue 3: Whether the Opposite Parties have abused their dominant position?

Issue 4: Whether the Opposite Parties have violated the provisions of section 3 of the Act as has been alleged by the informant?

Determination of Issues

6.2 Under the facts and circumstances of the case what ought to be the relevant market in the case?

6.2.1 The Commission notes that while delineating the relevant product market, DG has distinguished DTH from cable TV. After analysing the product characteristics of the two platforms, DG has determined cable TV service as the relevant product market in the case.

6.2.2 The Commission on a careful consideration of the analysis of product characteristics carried out by the DG while determining relevant product market finds itself in agreement with his conclusions. The Commission is of the opinion that the cable TV service is a distinct product and is not a perfect substitute of other platforms of TV channel transmission such as DTH, IPTV etc.

6.2.3 The Commission observes that as per the provisions of section 19(7) of the Act while determining the relevant product market, factors such as physical characteristics or end use of goods or service, consumer preferences, price of the goods or service etc. need to be considered. The characteristics/features of cable TV are different from the other platforms of transmission.

6.2.4 On the basis of difference in technology, scalability, viewing experience and the reach, the DTH, IPTV and cable TV services are not interchangeable or substitutable with each other. Due to digital compression techniques, DTH offers more channels as compared to cable operators. DTH provides digital picture on all the channels, while cable TV only offers analog channels. On analog platform of cable TV, getting high definition quality is not possible like DTH.

6.2.5 The Commission observes that in terms of accessibility of service to the consumer, the reach of the cable TV is different from other platforms of transmission. Cable TV can reach any place only with the help of cables whereas DTH works everywhere even the rural and remote areas. A cable operator provides services such as exclusive local channels which are exclusive to the cable operators and are not generally provided by DTH or other service providers.

6.2.6 Further, the platforms like DTH offer flexible packages where one can select the channels one wants to watch and pay for them only while on cable TV no such choice is available.

6.2.7 The Commission also observes that there is flexibility to the users of other platforms like DTH since they provide additional facilities like radio channel facilities. There are many other services like games, video recording etc. provided by the DTH operators, which are not available in case of cable transmission. Moreover, it is easy for the consumers to carry the whole system in case of other platforms in case of shifting while for cable connections new connection would be required. Cable TV system does not provide facility of recording, pause or rewind like other platforms like DTH.

6.2.8 The Commission further observes that DTH viewers receive the transmission of channels independently from the satellite whereas the cable TV operators receive the signals from the broadcasters through satellite in their control room and thereafter distribute these signals to customers through cables. There is no choice for consumers in selection of the channels in case of cable transmissions whereas the choices are given by the DTH service providers. The installation of the DTH in homes requires set top box, dish antenna and remote etc. whereas no such requirements are there for cable installation. The spectrum used by these two transmissions is also different.

6.2.9 Keeping in view the above product characteristics, the Commission holds that the cable TV system is distinct from DTH or other platforms like IPTV etc. The relevant product market, accordingly, should be cable TV service. In this regard, the Commission also notes that since the product characteristics of cable TV are entirely different from other platforms, the need of carrying out SSNIP test would not materially affect the determination of relevant market in the case. The change in price of Cable would not affect its market in comparison to DTH since the characteristics of the two platforms are entirely different.

6.2.10 With regard to the determination of relevant geographic market in the present case, the Commission, in agreement with DG, is of the view that due to the factors such as local specification requirements, consumer preferences, communication language, distribution network etc the territory of Punjab and Chandigarh is the relevant geographic market in the present matter.

6.2.11 The Commission observes that a cable TV service provider cannot operate beyond its jurisdiction because of the stated factors. Further, the conditions of competition for provision of cable TV in different states are different owing to difference in consumer preferences. The channels transmitted by a cable operator in Punjab and Chandigarh are different from a cable TV operating in other states because of many local factors. Thus, the Commission considered the territory of Punjab and Chandigarh is the relevant geographic market in the present case.

6.2.12 In view of foregoing, the Commission holds cable TV service in the territory of Punjab and Chandigarh as the relevant market in the case.

6.3 Whether the Opposite Parties are dominant in the relevant market?

6.3.1 The Commission notes that DG has treated the Opposite Parties as a group in terms of the provisions of clause (b) of the Explanation to Section 5 for application of the provisions of Section 4 of the Act. The Commission observes that the term group has been defined in clause (b) of the Explanation to Section 5 of the Act as under;

(b) “group” means two or more enterprises which, directly or indirectly, are in a position to-

(i)  exercise twenty-six per cent or more of the voting rights in the other enterprise; or

(ii)  appoint more than fifty per cent of the members of the board of directors in the other enterprise; or

(iii)  control the management or affairs of the other enterprise;

6.3.2 The Commission observes from the report of DG that OP 5 has more than 50% share in OP 1 and OP 2 and 99% share in OP 3. OP 5 is controlling and managing the affairs of OP 1, OP 2 and OP 3 directly. The OP-5 is the Managing Director in OP-1 and Director in OP-2 and OP-3. Thus, the Opposite Parties -1, 2, 3, and 5 can be said to be part of a group.

6.3.3 The Commission also observes that the OP-4 is a Public limited company promoted by Essel group. As per the findings of DG, OP-1 or any other Opposite Parties do not have either 26% share in OP-4 or power to appoint more than fifty percent members of Board of Directors of OP-4. There is no structural relationship between the OP-4 and remaining Opposite Parties which establishes that OP-4 is part of the common group.

6.3.4 The Commission accordingly observes that while OP-1, 2,3 and 5 form a group within the meaning of clause (b) of the Explanation to Section 5 of the Act, OP-4 is not part of this group.

6.3.5 With regards to dominance of this Group in the relevant market, the Commission on analysis of factors mentioned in section 19(4) of the Act notes that as per the findings of the DG, the number of subscribers of the OP group is more than 85% of the total subscribers in the relevant market of Punjab and Chandigarh. DG has also brought out that even if the geographical territory is taken as Punjab, H.P. and Haryana, the area where the informant distributes its channels, the share of OP group in cable TV market is more than 60%. From the report of DG it appears that no competitor in the State of Punjab has more than 10,000 subscribers whereas the subscriber base of the OP group is about 40 lacs.

6.3.6 The Commission further notes on the basis of information gathered during investigation that market share of the OPs in the territory of Punjab is as under;

Market Share of Opposite Parties in Punjab State

S.N. City Share of Fastway Transmission Share of Hathway Sukhamrit Share of Creative Cable Total Market Share of OP Group Share of Wires & Wireless (operated through Creative cable)
1. Patiala 90 10 100
2. Bhathinda 90 10 100
3. Amritsar 45 5 50 45
4. Jalandhar 35 35 70 25
5. Ludhiana 40 25 65 35
6. Chandigarh 30 25 55 30
7. Ludhiana Outer 75 75

6.3.7 It is seen from the above that the OP group is a dominant player and commands substantial market share in the relevant market. The Commission also observes that even though the OP 4 has market share of 45%, 25%, 35% and 30% in Amritsar, Ludhiana, Jalandhar and Chandigarh respectively but given the fact that the rights for collection, distribution and dealing with broadcasters for these territories have been granted by it to OP group company ‘Creative Cable’ the OP 4 cannot be considered as an independent competitor to OP group and therefore, it is not in a position to pose any competitive pressure on OP group. Based on these facts and circumstances the Commission observes that the OP group holds a dominant position in the relevant market.

6.3.8 The Commission observes that in terms of size and resources also, the OP group is much bigger and is in advantageous position as compared to the competitors in the state of Punjab & Chandigarh. The OP has its cable network and head ends in all the districts of Punjab whereas other competitors are operating in only one or two districts only. It has also spread a network of optical fibre in the state to strengthen its market power by adopting latest technology in the region. The total turnover of the OP group from cable TV operation during the Financial Year 2010-11 was more than Rs.200 crore. Thus due to its vast network and presence coupled with regional factors it has greater commercial advantages over the competitors. The competitors of OPs are some small MSOs with single analog head end, comprising of a very small network and subscribers base.

6.3.9 As has been reported by the DG that after the entry of the group in 2008 it has consolidated its position. Earlier two major players in the market of cable TV viz. Heathway Sukhamrit of Heathway group and WWIL of Essel group, were having the major portions of the market share in Punjab & Chandigarh. However after the entry of Fastway Transmissions in the territory of Punjab their share got substantially reduced. Shri Gurdeep Singh acquired 50% shares of Heathway Sukhamrit and started controlling the company. The other major player WWIL also granted the rights for collection, distribution and dealing with broadcasters for its territories in Punjab to Creative Cable, a group company of Shri Gurdeep Singh. The investigation report of DG has also indicated that none of the other players has been able to increase their market share or expand the subscriber base after the entry of the OP group. The major networks, like Den network, which operates in the neighbouring areas of Punjab, have not been able to enter as competitors of the OP group in Punjab State.

6.3.10 The Commission finds that the relevant market structure is also such that the Opposite Parties assume position of dominance in the relevant market. The observation of TRAI in its consultation paper on digitization of cable TV is relevant in the context of present matter wherein it has been mentioned that ‘The level of competition in the MSOs’ business is not uniform throughout the country; certain cities and states (e.g. Delhi, Bangalore, Haryana, and Maharashtra) have a large number (5-7) of MSOs serving each city, on the other hand certain markets like Tamil Nadu and Punjab are characterized by regional monopolies – where close to 90% of the market is dominated by a single MSO. There are thus specific and regional and state based monopolies within the country which create barriers for entry of new players into these markets. Such MSOs are in a position to exert market power in their negotiations with the broadcasters on the one hand, and with the LCOs on the other.’

6.3.11 The Commission notes from the report of the DG that the consumers of cable TV in Punjab &Chandigarh also have huge dependency on the OP group. They do not have any effective substitute to switch over to the other network. As has been revealed by the investigation carried out by the DG, the investigation has revealed that even at the time of ICC World Cup when the OP did not transmit the ESPN/Star channel on its network the consumers had no option of other cable network. The consumers have no say in selection of channels on its network, neither in terms of quality or band of channels transmitted to them.

6.3.12 The Commission observes that due to its huge market share, size, resources and market structure, the OP group is able to operate independent of the competitive forces in the market. The OP group is a dominant player in the relevant market on account of its market share, market power and its ability to operate independent of competitive forces as well as to affect the competitors, consumers and the relevant market in its favour as per Explanation to section 4 read with section 19(4) of the Act.

6.4 Whether the Opposite Parties have abused their dominant position?

6.4.1 The Commission notes that the DG has found the conduct of the OP group to be abusive under the provisions of section 4(2)(a), 4(2)(b)(i) and 4(2)(c) of the Act. The DG has found following acts and conduct of the Opposite Parties to be abusive;

(i)  unfair and discriminatory conditions on the broadcasters and LCOs in violation of section 4(2)(a)(i).

(ii)  Limiting and restricting the provision of services in cable TV for the broadcasters and consumers in violation of the provisions of section 4(2)(b) (i) of the Competition Act.

(iii) Denying market access to the broadcasters and other stakeholders in contravention of the provisions of section 4(2)(c) of the Act.

6.4.2 The Commission has carefully gone through the findings of DG, submissions of various parties and averments of the information. The Commission notes that the informant, a media company was granted licence on 19.03.2009 by the Ministry of Information and Broadcasting, Government of India to uplink its news and current affairs T.V. Channel by the name of ‘Day and Night’. The informant, for the purpose of telecasting its programmes, entered into three agreements dated 01.08.2010 with OP-3 to 5, Multi System Operators and members of the group.

6.4.3 The facts on record also suggest that for a period of about two months, the Opposite Parties transmitted the channel of the informant smoothly without any problem or complaint from either side. However, since about mid-October 2010, the informant started facing problems with regard to transmission of its channel. The informant also wrote letters on 15.10.2010 and 26.12.2010 calling upon the Opposite Parties not to indulge in such unfair and illegal activities. When the Opposite Parties informed the informant that the disruptions in the transmission of the channel were on account of certain technical problems, the informant sent an e-mail to the Opposite Parties dated 29.12.2010 offering them to rectify the alleged technical problems.

6.4.4 The informant issued a legal notice to the OP-1, OP- 2 and, OP- 3 since he was facing disruptions in transmission of channels. Thereafter, the Opposite Parties terminated the Channel Placement Agreements and also issued a public notice in this regard. According to DG, the channel of informant was a free to Air, thus no payment from consumers or cable operators were required to be made to the informant by the OPs. The OPs however charged a fixed amount from the Informant to place the channel on their network. The channel started its transmission in August 2010. However, transmission of its channel was stopped and was removed in February 2011, within 7 months of its launch.

6.4.5 The Commission also notes that the OPs have denied that news channel of informant was deliberately disrupted. The OP group has submitted that while the disruption was only on two occasions due to technical reasons, the decision for termination of agreement was based on commercial reasons. The OP group has also brought out that the decision of termination was taken due to the fact that there are spectrum constraints as the capacity of analog cable TV limits the numbers of channel on its network to only 80 channels and in view of the less popularity and demand from the consumers. The OP group has also contended that it is not compulsory for the MSOs to carry the channel of all the broadcasters as per the regulations of TRAI and it has freedom to take decision in respect of the transmission of any channel on its network.

6.4.6 The Commission has carefully considered the aforesaid contentions of the Opposite Parties. The Commission observes that the group has never terminated any agreement before the due date except in the instant case. The Commission also notes that DG has analysed the data showing TRP ratings of different news channels in Punjab which show that the TRP rating of the informant despite being a new channel and disruption in signals show a growth during the transmission period. The TRP rating of the informant ranged between 3 to 7 which is almost equal to some other channels. Therefore, the argument of OP that no demand or popularity of the channel was found among the consumers led to the mid-term termination has no weightage or force. It has been reported by the DG that there is no practice or system of termination on the basis of performance or popularity of the channel.

6.4.7 The DG in his report has given details of copies/transcripts of feedback from various viewers which substantiate the allegations that the OP group disrupted its channels. The informant has also enclosed the transcripts of e-mails received from various places, like Ludhiana, Bathinda from journalists and other viewers.

“From: +91947767925

Sent: Sunday, January 03.2010 3:29 PM

It is very sad to know that cable mafia, wid support of a ruling party, is blocking ur channel signal. Truth can’t be suppressed we r wid u.

From: +919646000444

Sent: Sunday, January 03.2010 3:39 PM

No sound in signal……….at Mohali phase 10 house no 2444

From: +91981444402

Sent: Sunday, January 03.2010 6:09 PM

We are unable to hear voice of reporters. There is too much echo in the voice. We are with u. u r doing a good job keep it up. We really appreciate ur work. Regards Surinder and group

From: +919814132148

Sent: Thursday, January 07.2010 8:06 PM

Voice of Day and Night news is not clear in our area Silverstone society sec-48 B, Chandigarh. Number of cable operators is 9915485050.

From: +919464133127

Sent: Wednesday, January 06. 2010 4:43 PM

At 4:30 pm ur channel is on but chardikala channel is off because of Manprit Badal at Batala distt. Gurdaspur.

From: +919463050082

Sent: Wednesday, January 06. 2010 7:38 PM

Hello Mr. Sandhu I m a regular viewer of ur news channel. In dis days problem in audio, Voice not clear as compare to channel From Fatehgarh Shahib, Punjab.”

6.4.8 The investigation records also suggest that the OP group also addressed various letters to various authorities including the Minister for Information & Broadcasting, Government of India; Chief Minister of Punjab; Chief Secretary of Government of Punjab, DM, Jalandhar highlighting the conduct of OPs regarding disruption in the transmission of the channel ‘Day & Night’.

6.4.9 The evidences as above confirm that there were disruptions in the telecast of the channel. The Commission further observes that the OP has argued that as per TRAI regulations it is not bound by “must carry”, as against the informant who is bound by a “must provide” provision. However, the argument of the OP group does not take away the fact that the informant is dependent on it for transmission of its channel and if it is denied that, it cannot get access to the market. It is not that the informant was not paying the placement fee charged by the OP group. There was no dispute on non payment of placement or carriage charges. An agreement was duly executed between the informant and the OP group for transmission of the channels of the former.

6.4.10 However, due to the fact that the subscriber base of the OPs is in excess of 40 lacs, every broadcaster including the informant is dependent upon their network. In such a situation, the Commission observes that the OP is in position to affect the market in its favour. Due to its market power, the OP group has denied the opportunity for transmission of channel of the informant. The group has no justification for termination of the agreement and its argument for justifying its conduct is not based on any sound footings. Its argument regarding shortage of spectrum for non-transmission of the informant’s channel in face of the fact that the spectrum constraint might have been considered at the time of entering into agreement with the informant upon charge of premium from the broadcaster. Once that was considered, the question of shortage of spectrum during the period of the agreement does not arise. Similarly the argument of low TRP is also not justified since in past there has been no practice of review of any agreement on the basis of TRP ratings in the middle of an agreement. The Commission observes that the argument of spectrum shortage and low TRP is merely an afterthought to justify its conduct.

6.4.11 The conduct of OP has resulted in loss to the informant-broadcaster as well as denial of services to the consumers who want to watch the channel of the informant. As on date the Informant has access to only 56,000 household on the cable TV in the state of Punjab & Chandigarh, where about 45 lacs households are connected on cable network. Thus the informant has been effectively wiped out from the entire relevant market by the conduct of OPs.

6.4.12 In the light of the facts and circumstances of this case, the Commission observes that due to the acts of the OP group, the informant has been denied the market access and opportunity to compete and holds that violation of the provisions of section 4(2) (c) of the Act gets established.

6.4.13 The Commission also notes the LCOs in their affidavits have submitted that the OP group have been overcharging them and have increased the rate arbitrarily without assigning any reason because of its monopoly. Thus, the conduct of the OP group has also affected LCOs, who are dependent upon MSOs adversely.

6.4.14 The Commission notes that DG has also submitted that the Opposite Parties have imposed unfair conditions in violation of provisions of section 4(2)(a)(i) of the Act by way of undue placement fee on the broadcasters. In this regard, the Commission observes that the investigation by DG or averments of the informant do not reveal as to what would have been the appropriate placement fee for transmission of the channel of the informant. There is no indication in the findings of DG as to what were the other conditions which were unfair or discriminatory affecting competition in the market.

6.4.15 The Commission observes that DG in his findings has also submitted that by denying the broadcasters to re-transmit their channels through their cable network, the Opposite Parties have limited or restricted the provision of services in cable TV for the broadcasters and consumers in contravention of the provisions of Section 4 (2)(b)(i) of the Act.

6.4.16 Considering the facts of the case in the context of the provisions of section 4(2)(b)(i) of the Act, the Commission is not inclined to agree with the findings of the DG. This sub-section is applicable when the dominant enterprise limits or restricts –

(i)  production of goods or provision of services or market therefor; or

(ii)  technical or scientific development relating to goods or services to the prejudice of consumers.

6.4.17 However, in this case, the Commission observes that by denying the Informant to re-transmit its news channel through their cable network the OP group cannot be said to have limited or restricted the provision or market of cable service because the Informant is not a participant in the relevant market as defined in para 6.2.12 and the service or the market of cable TV is not getting affected. Therefore, it cannot be said that the OP group through its act has restricted or limited the provision or market of cable services. The Commission does not find the OP group in contravention of section 4(2)(b)(i) of the Act on this issue.

6.5 Whether the Opposite Parties have violated the provisions of section 3 of the Act as has been alleged by the informant?

6.5.1 The Commission observes that the informant has alleged that the OP group has acted like a cartel. It has also been alleged that the Opposite Parties acting in a totally illegal, unfair and discriminatory manner have contravened the provisions of section 3(4)(d) of the Act by terminating the Channel Placement Agreements unilaterally and without any basis and thereby adversely affecting competition by abusing its dominant position.

6.5.2 In this regard, the Commission observes that the Opposite Parties-1, 2,3 and 5 are part of the same group. Since there cannot be a case of any anti-competitive agreement of the nature mentioned in section 3(3) of the Act among the entities of same group, it cannot be said that the Opposite Parties have formed a cartel. Similarly, the allegations of the informant that the Opposite Parties have violated the provisions of section 3(4)(d) by unilaterally terminating the channel placement agreement has no basis. There is no case of an agreement within the meaning of section 3(4)(d) among entities falling along different supply or production chain in the matter which may be said to be anti-competitive. Moreover, the allegation of the informant that the OPs have acted unilaterally to terminate the channel placement agreement itself suggests that there is no agreement between the two parties which could have caused appreciable adverse effect on competition in relevant market in India. DG has also not found any contravention of the provisions of Section 3 of the Act in the matter. Therefore, the Commission is of the view that no violation of provisions of section 3 of the Act is made out against the Opposite Party.

7. Order under Section 27 of the Act

7.1 The Commission has found the OP group in contravention of section 4(2)(c) of the Act. Considering the facts and circumstances of the case and the gravity of contravention of the provisions of section 4 of the Act, the Commission, in exercise of powers under Section 27(b) of the Act, decides to impose penalty on the concerns of the OP group who are operating as MSOs at the rate of 6% of their average turnover for the last three preceding financial years. The amount of penalty on each of the Opposite Parties is calculated as under:

S.

No

Name of

the Parties

Turnover (sales) in year Ended on 31.03.2009 in Rs. Turnover (sales) in year Ended on 31.03.2010 in Rs. Turnover (sales) in year Ended on 31.03.2011 in Rs. Average turnover in Rs. 6% of Average turnover in Rs.
1. M/s Fast Way Transmission Pvt. Ltd. 69,441,7915 1,070,817,123 1,653,379,325 1,139,538,121 68,372,287
2. M/s Hathway Sukhamrit Cable & Data com Pvt. Ltd. 2,567,291 108,403,564 195,612,356 102,194,404 6,131,664
3. M/s Creative Cable Network Pvt. Ltd.  682,188 15,762,256 278,415,007 98,286,484 5,897,189
Total 80,401,141

7.2 Accordingly, the Commission imposes a penalty of Rs. 80,401,141 (Rs. Eight crores four lakhs one thousand one hundred forty one only) on the entities of the OP group. In exercise of the powers under section 27 of the Act, the Commission also directs that the contravening Opposite Parties should ‘cease and desist’ from indulging in anti-competitive practices which have the effect of denial of market access as has been discussed in preceding paras of this order.

7.3 The Opposite parties are directed to deposit the amount of penalty and file an undertaking in compliance of direction given in para 7.2 within 90 days from the date of receipt of the order.

8. The Secretary is directed to communicate this order of the Commission to the informant and the Opposite Parties accordingly.

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0 Comments

  1. Sudershan Goel says:

    A trendsetting judgement. However, the penalty is too small. Besides, the complainant deserves to be adequately compensated.

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