Antitrust Issues In Entertainment And Film Industry (Part 2)

In the last segment, we analysed how section 3 of the Competition Act, 2002 (hereinafter the Act) works in the entertainment industry, and how it can be used. In this part, we’ll look at how section 4 of the Act works in the entertainment business. Section 4 of the Act talks about people who use their power for their own gain. Market domination doesn’t have a single or universally accepted definition. However, it is often defined as the “ability of a company to take a strategic position in advance that limits the options available to competitors.” They can use this advantage by making a credible promise that scares off their rivals and limits the scope of their actions, which gives them an advantage. As defined by the Act, the company is in a position where it can run its own business, stop effective competition in the market it’s in, and harm customers or competitors by standardising industry terms.

An assessment of dominance by an enterprise would only be done in the market where the business is in. This is because the scope of dominance is not unlimited and is limited by product or geography. To figure out if a company is abusing its power, one first needs to know the market where the company is working. This is the first step in testing dominance. The relevant market is defined in Section 2 (r) of the Act. The CCI has the power to choose what kind of market the CCI wants to talk about. To figure out if a market is relevant, it needs to be seen that there is a place where people switch out products or services because they have similar characteristics, prices, and use.[i]A geographic market needs to have an area where goods and services are sold together distinctly, and this area should be very different from its next-door area. The way the commission defines the relevant market directly affects how the firm is judged as having too much power.

To understand the concept in a deeper sense lets analyse the case laws set forth by the competition authorities.

The applicability of the test of dominance is secondary in film industry instances; what matters most is whether the Associations to which the dominant cases are to be applied are enterprises or not within the meaning of section 2(h) of the Competition Act. This part would establish the legal status of associations as defined by the Commission and it would then conduct an investigation of enterprise dominance statutory provisions to be interpreted.

In the matter of Reliance Big Entertainmentvs. The Karnataka Film Chamber of Commerce(KFCCC)[ii], the association discriminated in the showing of Kannada and non-Kannada films, with more preference given to Kannada films. It’s a matter of first and foremost promoting local art and culture and secondly that big budget films like Bollywood and Hollywood have market power and thus control the share of the market. Third is the fact that Kannada films are only shown within Karnataka or possibly some other states in South India, whereas Bollywood movies are universally popular. That is why the latter should be restricted in Karnataka.

Sections 4(2)(a)(i) and 4(2)(b)(i) of the Act allow associations to limit the availability of services in the market, which may be done for cultural reasons, but this cannot be done at the expense of others. Discrimination based on caste, creed, or language is explicitly prohibited by India’s Constitution.[iii] Rather than restricting other market participants in the sector, the group should focus more on improving film quality, etc.

The digital rights to a movie are another point of contention between the organisation and its members. Due to the short life span of movies in cinemas, another method of making money is by broadcasting the movie on television.

For DTH satellite rights, there is no defined hold back term for abuse of dominance. For some cases, this term is limited to three months, while in other cases it is limited to six months[iv], and in still other cases it is limited to five years[v]. As a result, filmmakers often rush to release their pictures ahead of schedule, and the Commission responds by blocking the release of any future films from the defaulting producer, thereby denying them market access. Considering the interests of all stakeholders, an appropriate period of time should be determined and proposed in the latter stages of this project.

Looking at another case, this time overseas, The Producers Guild of America and the Multiplex Association of America are at odds, and this is the first time that a quarrel has arisen between the two organisations. Both the informant and the opposing party are made up of members of the multiplex exhibitors’ association. The association of film producers claims that the Multiplex Association is able to refuse them access to the multiplexes, and they claim that the Multiplex Association has a shareholding of up to 60% in the relevant product market of “Multiplex,” allowing them to dominate. However, according to DG’s findings in his report, this was not the case. Ultimately, it was determined by this panel that MAI does not possess any inherent authority and relies solely on the combined influence of its members to exercise dominance.[vi] This case is relevant because in India, there is no provision for collective dominance, unlike in the United States.[vii]

In the Ajay Devgn Films Competition Case[viii], brought by informant Ajay Devgn Films against Yash Chopra’s Yash Raj Films Pvt. Ltd., India’s sole privately held film studio, the film‘Jab Tak Hain Jaan’ had to be shown on Diwali in order for Yash Raj films to release ‘Ek Tha Tiger’ on Eid, a star-studded picture that was guaranteed to be hugely popular. Because of the tie-in arrangement, they alleged that there were unfair and discriminatory terms tied to the purchase of products or services.

An unspecified date led the commission to conclude that Yash Raj’s productions were not a dominant force in a relevant market at the time of its ruling. For all its fame and its track record of successful films, the production company can’t claim to be unbeatable.[ix]In some cases, essential information may not be obtained because of the need for a fast-track proceeding. Since its inception in the 1960s, Yash Raj Studios has been a major player in the Indian entertainment industry, according to the company’s website. One of India’s most prestigious film libraries and some of the highest grossing movies in the industry are only some of the company’s achievements since its founding in 1970. Because of its market domination and economic power, it is possible to say that the corporation is in a dominant position under the Competition Act.

SUGGESTIONS:

  1. When these associations were created, there was no satellite DTH technology and the prints of the movies had to be distributed region-by-region. This should be taken into consideration. All of this is now handled electronically. Considering the current circumstances, it is the author’s belief that the regulations should be adapted and updated accordingly.
  2. Interim relief is sought in the majority of film cases because the films must be released on time, or else the producers will suffer a significant financial loss. Investigations into such cases are frequently incomplete or inaccurate. As a result, it has to be said that we require a universally applicable code.
  3. In the Indian Competition cases, even though associations were regulating the sector, they were able to avoid section 4 i.e. abuse of power since they were not ‘enterprises’ within the section.
  4. A film release ban is imposed by associations in order to recoup debts owed by defaulters and enhance the well-being of its members. It takes a long time to recover from routine judicial hearings. The associations are doing a wonderful job in this regard, as well. However, the problem is that such actions lack legal grounding. In such cases, the CCI’s interference gives the defaulters a free pass. Researchers say that before enabling the film’s defaulters to continue with its release, CCI should pay the debts that they owe them.

CONCLUSION:

In the examples cited in this work, the Commission determined that associations are not enterprises under section 2(h) of the Competition Act because they do not engage in economic activity. As a result, they are not covered by section 4 of the Act. However, the Commission highlighted that because film associations are associations of individuals or enterprises, their actions would fall within section 3 of the Act, as they restrict the supply of films. But the Commission has not properly defined the business and functions of the associations’ members. The rationale for this is that certain associations are a federation of distributors, producers, and exhibitors, and section 3 applies to associations that conduct comparable activity. This, in this author’s opinion, should be re-examined by the Commission. A violation of competition law will be interpreted as a violation of free trade. It has a wide range of applicability and therefore it is highly suitable to the activities of film associations and can be made applicable subject to the facts of the case.

Author: Amey Jadhav – an intern at Khurana & Khurana, Advocates and IP Attorney,  in case of any queries please contact/write back to us via email vidushi@khuranaandkhurana.com

References:

[i] Section 2(t), Competition Act, 2002.

[ii] 2012CompLR269(CCI).

[iii] Art. 15, Constitution on India, 1950.

[iv] Rules, Motion pictures Association, Delhi

[v] Rules, Bihar and Jharkhand Motion pictures Association.

[vi] Sherman Act, 15 U.S.C §1,(1890)

[vii] Film & Television Producers Guild of India Against Multiplex Association of India (MAI), Mumbai, PVR Ltd, Inox Leisure Limited, Fame India Ltd, Reliance Media Works Ltd, Cinemax India Ltd. , Fun Multiplex Pvt. Ltd., HDIL Entertainment Pvt. Ltd., DT Cinemas, Movietime Cineplex Pvt. Ltd., Satyam Cineplexes Ltd., SRS Entertainment & Retail Ltd., AB Movies Pvt. Ltd., Velocity Limited, p. 88 Case no. 37/2011

[viii] Case no. 66 of 2012.

[ix] Sec. 19(4)(b), Competition Act, 2002.

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