Competition Commission of India (CCI): In a significant decision, the coram of Ashok Kumar Gupta (Chairperson), Sangeeta Verma and Bhagwant Singh Bishnoi (Members), in view of the negative impact of exclusive and restrictive agreements between online ticketing platforms and single screen cinemas/ multiplexes on the relevant market; held that there is a prima facie case owing to the conduct of ‘BookMyShow’ that requires investigation by the Director General (DG) to determine whether their conduct of has resulted in contravention of the provisions of S. 4 (abuse of dominant position) of Competition Act, 2002.
Background of the case: Showtyme an online movie ticketing portal was launched in November 2021 in order to provide an alternative option to the cine-goers in Hyderabad (later across India) to book their movie tickets online, by paying a convenience fee of ₹11/- per ticket; which is stated to be 40-50% less than the existing players. On the other hand, BookMyShow, a popular online movie ticketing portal, holds at least 90% market share in movie ticket booking industry in India.
The informant in the instant matter, is a social activist and the founder of Showtyme, who alleged that BookMyShow has formed an explicit cartel with multiplexes and theatres and pursuant to which, it has signed exclusive agreements with them in order to thwart any opportunity to other platforms to sell tickets of cinema, even at 50 % lesser convenience fee than that of BookMyShow, thereby controlling the movie ticketing industry and imposing barriers for new entrants like Showtyme.
- It was submitted the informant that BookMyShow has abused its dominant position under S. 4 of the Competition Act, by imposing unfair and discriminatory conditions on the theatres/ multiplexes i.e., making them sign contracts for sale of 100% tickets on its platform.
- It was further submitted that BookMyShow is entitled to charge the consumers convenience fee for online booking of tickets; however, entering into agreements with theatres/multiplexes to not sell the movie tickets online to anyone else; giving lakhs and crores of rupees on loans at zero interest to the Opposing Parties; and selling more than 50% tickets of movies online; such acts leaves no scope for the new entrants to enter into the market and thereby creating a hostile effect upon fair competition.
- The informant also put forth before the Commission that he submitted various complaints to licensing authorities and other authorities in the State of Telangana and has also given a representation to the Ministry of Consumer Affairs, Government of India.
Per contra, BookMyShow argued that-
- It is an intermediary engaged in the activity of facilitating online booking of tickets for movies, plays, concerts, sports events across India through its mobile application and website and follows a standard form of contract and commercial terms. The duration of the agreements with each cinema/ theatre/ multiplex is negotiated as per their requirement. It is entitled to charge convenience fee from customers for facilitation of booking of tickets through its mobile app and website.
- BookMyShow also contended that the informant approached the Commission with “unclean hands” as he filed the information even before the launch of Showtyme’s website. As per BookMyShow, the website should have been in operation for at least a certain amount of time to experience the competition in the market from various players. Thus, the question of causing harm to Showtyme does not arise.
- Regarding the allegations of exclusivity, it was stated that BookMyShow is a relatively new entrant in the relevant market; therefore, in order to penetrate this market BookMyShow had to tie-up with certain cinema theatres on an exclusive basis. This exclusivity also benefits the cinema theatres that have tied up with BookMyShow as otherwise they do not have the resources to make the tickets available online through their own website or other modes. It was further contended that allegations of creating entry barrier are misleading as the market is still evolving and volatile in nature. It was stated that various participants like PayTM have entered the market and established a significant presence.
- It was stated that BookMyShow does not provide any monetary assistance in return for exclusivity. In certain cases, it only provides some security deposit to adjust the ticket price and revenue share to the cinema theatres.
Observations: Perusing the facts and the allegations levied upon BookMyShow, the Commission duly noted that the grievance of the informant centered around the agreement and arrangement between BookMyShow and certain theatres/ multiplexes in the city of Hyderabad, thereby allegedly preventing him from offering the services of his website Showtyme for online booking of tickets.
- While determining “relevant market” for the instant matter, the Commission noted that relevant product market comprises of all those products or services which are regarded as interchangeable or substitutable by consumers, by reason of their characteristic, price and intended use. Therefore, the most important parameter is as to how the consumers or users of products or services perceive substitutability or interchangeability amongst provision of services. The Commission noted that the services of online platforms like BookMyShow are available pan-India and the platform faces similar competitive constraints and homogeneous conditions of competition throughout India. Thus, the relevant market in the present case was that of ‘market for online intermediation services for booking of movie tickets in India’.
- The Commission pointed out that BookMyShow had not provided data on its market share for the online intermediation services for booking of movie tickets in India rather they provided the number of tickets sold, indicating total yearly footfalls and not value of tickets in INR crores, which is apparently untenable and inconsistent for computation of market share of BookMyShow even in the wider market proposed by it. The Commission stated that it is not inclined to rely upon such figures.
- Regarding BookMyShow’s dominant position, the Commission observed that market share is one of the many factors that are considered in the assessment of dominance. In the instant case, market share of the platform needs to be seen in conjunction with its reach, scale and the network effects that work in its favour, leading to huge consumer footfalls thereby making presence on the platform critical for visibility and competitive ability of cinema theatres. The ability of BookMyShow to enter into exclusive agreements corroborates its position of strength and the various provisions in its agreements with cinema theatres/multiplexes, indicate its superior bargaining power in deciding contractual terms. These factors, taken together, prima facie appear to substantiate the dominant position enjoyed by BookMyShow in the relevant market of online intermediation services for booking of movie tickets in India.
- The Commission also pointed out that BookMyShow’s exclusive agreements have the potential to reduce competition in the relevant market, as they may make rival intermediary platforms or new entrants incur significant additional cost to induce the cinemas to give up their exclusive contracts with the leading platform with market power. “The exclusive and restrictive agreements with single screen cinemas and multiplexes, in conjunction, prima facie appear to have the potential of denying market access to competing platforms and potential entrants. The cinema theatres as well as the cinegoers alike are restricted in their choice of alternate ticketing platforms, during the working of the contracts that BookMyShow has with large number of theatres/ multiplex chains”.
- Upon perusal of the exclusive agreements with single screen cinemas, the Commission also pointed out that BookMyShow has reserved the right of data collection, ownership and storage; without the cinemas having any right, title, interest to such data; even though in the agreements there is provision for sharing of data.
Decision: With the aforementioned observations, the Commission was of the view that “exclusivity relating to data ownership can increase the bargaining power of the platform over time. Data further strengthens and entrenches the network effects limiting inter platform competition. In a dynamic sense, this would imply that BookMyShow would earn monopoly rents, going forward. The aspect of exclusive ownership of and access to data by a dominant intermediary, merits investigation”.
The Commission was of the view that there exists a prima facie case regarding BookMyShow’s conduct which should be investigated by the Director General under the provisions of S. 26(1) of the Competition Act. The Commission also directed the DG to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order.
[Vijay Gopal v. Big Tree Entertainment Pvt. Ltd., 2022 SCC OnLine CCI 36, decided on 16-06-2022]