Kerala’s Cinema Trade Associations and their Office Bearers penalized for Cartelization

Competition Commission of India (CCI): In the series of its orders against trade unions/associations for anti-competitive agreements, the CCI yesterday found the arrangement relating to distribution of films for releasing between the Opposite Parties (Ops) namely, Kerala Film Exhibitors Federation (OP1), Kerala Film Distributors Association (OP2), and Kerala Film Producers Association (OP3) in violation of section 3(3)(b) of the Competition Act, 2002.

The Commission held that OP-1, OP-2 and OP-3 have transgressed their legal contours and indulged in collective decision making to limit and control the exhibition of films in the theatres other than the ones owned by the members of OP-1. The Commission did not see any rational justification for prescribing such criteria which is exclusionary in nature.

It declared that the Competition Act condemns such decisions taken by the associations which limits/ restricts the supply of goods/ services and affects competition in the market. The Commission viewed that the collusion between the OPs without any logical basis was nothing but the manifestation of their anti-competitive conduct to benefit the members of OP-1 at the expense of other theatre owners and movie goers i.e., consumers.

It is found that the OP1 was the main culprit behind the cartel conduct and the members of OP2 succumbed to the restriction imposed by the OP1.  The Commission cleared that OP-2 is guilty of not distributing movies to the theatres of the members of the Informant and thus violating section 3(3)(b) read with section 3(1); of the act. However, OP3 was not found guilty because of its non-compliance with the arrangement between the Ops for limiting and restricting distribution, and boycotting release of films. 

The Commission ruled that the office bearers of the OP1 and OP2 are liable to penalty under section 48. During the period of contravention, they were actively involved in the affairs of their respective associations and as such they are responsible for the anti-competitive decision making by their respective associations, Kerala Cine Exhibitors Association  v. Kerala Film Exhibitors Federation, 2015 CCI 15,decided on 23rd June, 2015


Ed. Note: In this order the Commission did not find the OP3 guilty of cartelization even though OP3 was signatory party to the agreement, because OP3 did not comply with the decision taken in the agreement and its conducts did not show that it (OP3) was against the wide release of the movies. This brings a new development in the competition law that section 3 will not attract if a party to an anti-competitive agreement is not acting upon it.



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