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Competition Commission of India (CCI): The Coram comprising of Ashok Kumar Gupta (Chairperson) and U.C. Nahta and Sangeeta Verma (Members) dismissed an application filed by a Telugu Film and T.V. Serial Producer and distributor on being not allocated sufficient cinema theaters/screens.

In the present case, Ashok Kumar Vallabhaneni (Informant) filed an application under Section 19 (1) (a) of Competition Act, 2002 against the OPs who are engaged in the business of production and distribution of movies in the States of Andhra Pradesh and Telangana, alleging inter alia contravention of the provisions of Sections 3 and 4 of the Act.

Informant entered into a Theatrical Distribution Agreement with Sun Picture according to which the Informant had purchased the “distribution and exhibition rights” for the dubbed version of the Tamil movie ‘Petta’ in the Telugu language, in the States of Andhra Pradesh and Telangana. Sun Picture decided to release the movie worldwide during the Pongal/Sankranti festival in the month of January, 2019.

Further, it has been stated that, Informant contacted OPs who have control over more than 80% of local movie theatres in the States of Telangana and Andhra Pradesh and requested them to provide a minimum of 400 screens in said states. OPs declined to provide a sufficient number of screens for the said movie due to which Informant immediately approached the ‘Telugu Chamber of Commerce’ and raised the issue of non-allocation of sufficient cinema theatres/screens.

It was alleged that due to cartelization amongst the OPs, the OPs allotted limited screens for screening the Informant’s dubbed movie, thereby,

depriving the right of the Informant from exhibiting the said movie in a sufficient number of screens and causing immense monetary loss.

Adding to the above allegation, the conduct of OPs not only adversely affected the competition at the distributor level but also had an appreciable adverse effect on the consumers/viewers. All of the stated allegations are said to be in violation of the provision of Section 3(3)(b) of the Act.

Another allegation added to the list was that the sole object of OPs was to monopolise the film industry with a view to preventing the entry of new producers and due to which Informant’s suffered a loss of about Rs 7 Crores. Therefore it has been stated that OPs were “Limiting or restricting the Telugu film industry” and thus violating the provisions of Section 4 of the Act.

Conclusion

Commission noted that,

“What the Act under Section 4 contemplates is the abuse of dominant position by an enterprise or a group rather than abuse of a dominant position of collective dominance by more than one entity.”

Thus, the commission stated that abuse on account of collective dominance is a concept not recognised by the Indian Competition regime so far. In the present case, Informant averred the presence of multiple players in the market. When the market is dynamic and is characterized by the presence of multiple players, no single player can be said to be in a position to affect the competitors or consumers or the market in its favour.

Regarding the allegation of cartelization, there was no material furnished or indicating collusion amongst OPs, thus no interference is warranted in that regard.

In view of the above facts and circumstances of the case, no case of contravention of the provisions of Sections 3 and 4 of the Act is made out against the OPs. [Ashok Kumar Vallabhaneni v. Geetha SP Entertainment LLP, 2019 SCC OnLine CCI 27, decided on 01-08-2019]

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Competition Commission of India (CCI), New Delhi: Coram comprising of Ashok Kumar Gupta (Chairman) and U.C. Nahta and Sangeeta Verma (Members), dismissed an application as the allegations in regard to abuse of dominant position or any other were not found to have been established.

The present case was filed by the Informant under Section 19(1)(a) of Competition Act, 2002, alleging contravention of provisions of Section 4 of the Competition Act, 2002 by Gujarat State Board of School Textbook (Opposite Party).

Opposite party used to publish school textbooks in various languages for the students of standard 1st to 12th. Syllabus for these textbooks was prescribed by the Gujarat Council of Educational Research and Training (GCERT) that was accepted by the Gujarat Government. It has also been submitted that OP has been entrusted with the responsibility of publishing various study materials in the State of Gujarat.

Allegations placed against OP

Opposite Party, without any stipulation in the terms of the contract, started discriminating between the printers by allotting more work to printers using web offset printing. Various printers decided to upgrade their machinery which resulted in the dependence for work on the OP as the customised up-gradation was done for OP’s work.

Opposite Party introduced a new system vide its Tender, as per which provided rates for the different types of category for printing & binding jobs.  After the opening of the commercial bids, it was discovered that 21 bidders had quoted identical bids of minus 31% of the base rate.

The Informant alleged that the said price was collusively decided by the said 21 bidders, forming a cartel. Thus, the said information formed to be the subject-matter of the investigation.

Informant alleged that OP is a dominant enterprise for the printing of textbooks in the State of Gujarat and is thus solely responsible for publishing of study material. Further, it added that the responsibility of getting the printing work done, confers a monopsonistic power on OP in respect of procurement of printing and binding services from the printers and the OP has abused its dominant position by imposing unfair and discriminatory price and conditions in purchase of such services.

Informant along with the allegation of abuse of dominant position also filed a separate application under Section 33 of the Act praying – an interim relief in nature of an interim order to OP to immediately stop the discriminatory price of excluding the Informant.

Analysis & Conclusion

Commission considered the above-stated matter and directed the OP to explain the procedure followed for empanelment of qualified bidders as per its tender and the reasons to exclude the 32 bidders.

Submissions of the OP are briefly stated under and which were noted by the Commission:

  • OP’s main objective is to make basic education affordable. Since the printing cost will directly affect the cost of textbooks which are made available to the students, the Tender cannot be termed as anti-competitive considering that the requirement of printing textbooks is for making basic education affordable.
  • Informant is venting his personal grievance in guise of the present information to coerce the OP to empanel him for the work of textbook printing.
  • Price for the printing of web-offset is actually a more cost-effective way of printing as there is major reduction in labour cost due to advanced technology
  • OP never specified any contractual condition with regard to upgrading of machinery which was, in fact, voluntary conduct on the part of printers to procure majority work against their competitors. Moreover, there is an alternative market for provisions of services of printing as the number of government schools have reduced to 76 % in the State of Gujarat.
  • total production capacities as declared by respective L1 bidders (26 bidders – deriving common L1 bidders for sheet-fed and web offset) were not found to be sufficient by the Opposite Party to complete the estimated requirement in the given timeline
  • Empanelled printers were required to submit a certain bank guarantee as per the stipulated terms. However, most printers were not able to furnish the required bank guarantee.

Commission dealt with the application very carefully and noted the submissions by the parties, further it found no merit in the application filed and no abuse of dominant position under Section 4 was established. [Ashokbhai M. Mehta v. Gujarat State Board of School Textbook, 2019 SCC OnLine CCI 30, decided on 07-08-2019]

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Competition Commission of India (CCI): This information was filed before Ashok Kumar Gupta, Chairperson; Augustine Peter and U.C. Nahta, Members under Section 19(1)(a) of the Competition Act received by informant who is an advocate alleging National Stock Exchange of India Ltd. for abuse of dominance under Section 4 of the Act.

The informant had come with a prayer that the case of ‘NSE Co-location Case’ which is being investigated by SEBI, CBI and ITD should also be investigated by Competition Commission for abuse of dominance. Informant had submitted that by giving unfair preferential access to some trading members of its co-location services the NSE had abused its dominance. And that NSE is dominant in its field having greater market power than Bombay Stock Exchange.

The Commission observed that NSE had limited and restricted the provisions of its services to other trading members availing the co-location service which resulted in ‘denial of market access’ to others to whom such unfair access was not given. Thus, the informant has alleged contravention of Section 4(2) (b) (ii) and Section 4(2) (c) of the Act. Commission was of the view that it could independently take the present matter but, the allegations were yet to be established through appropriate proceedings. Therefore, the Commission ordered the matter to be closed in terms of the provisions of Section 26(2) of the Act.[Jitesh Maheshwari v. National Stock Exchange of India Ltd., Case No. 47 of 2018, Order dated 07-01-2019]