The Legality of Multiplex Boycotts in the Age of Streaming
Introduction : Recently, the Carnatic region was caught in a strife between its Multiplex Association and the Producer’s Council. The discord was rooted in a question asked by filmmakers across the country: “Can Producers push for Over-The-Top (OTT) Releases within four weeks of a theatrical release, or must there be a mandatory eight-week window?” If so, “What rights do Film Exhibitors and Producers have?”
The traditional film was shot and released in theatres, where it celebrated an expeditious run. It was only after eight to ten weeks that the film witnessed a direct-to-home (DTH) release i.e. the film was streamed on satellite television or home video. Today, that timeline is collapsing. Driven by immediate monetisation needs and demanding consumer preferences, production houses are pushing for DTH releases of major motion pictures on OTT streaming platforms, within three to four weeks of their theatrical debut, or bypassing cinemas entirely for direct-to-digital premieres.
This shortened window has triggered intense friction between the Multiplex Association of India and the Producers, with Multiplex Associations often employing harsh measures such as boycotting, pulling screens or refusing to exhibit movies. The shortening of the exclusivity period raises a pivotal question in Law: “Is enforcement of an exclusivity window by multiplex chains violative of copyright and competition rights or is it a valid protection of commercial interests?”
Owner of the IP
To understand the illegality of multiplex boycotts, one must first understand who holds the absolute rights to a movie.
Under Section 2 (d) (v) of the Copyright Act, 1957, a Producer is regarded as the author of a Cinematograph Film. Thus, the producer is the commercial and creative entrepreneur responsible for the inception and execution of a film. Further, as per Section 14 (d) of the Copyright Act, 1957, the producer has exclusive rights over his film, allowing him to make a copy of the film, or to sell or give the film on commercial rental, or to communicate the film in public and to also associate such rights with the sound of the film.
Because Producers hold this statutory monopoly, they possess absolute freedom to decide how, when and where their property is commercialised. This also implies that, since Filmmakers (excluding producers) and Multiplex Enterprises do not own the film, their rights are limited or sometimes negligible. Multiplex Chains, especially, are then classified as distribution channels. Thus, when theatre associations dictate an inflexible eight-week exclusivity window to Producers, they are effectively trying to rewrite the Copyright Act. Such directions can be interpreted as attempts to strip producers of their legal right to freely choose the most profitable medium for their film.
In this regard, Section 3 (5) (i) of the Competition Act, 2002, allows “reasonable restrictions” to protect Intellectual Property Rights. Thus, the safe harbour of Section 3 (5) can only be claimed by the actual holder of the IP i.e. the Producer. It cannot be used by a third-party buyer or exhibitor to shield collective, coercive commercial tactics against the actual owner of the copyright.
Cartel versus Producer Autonomy
When multiplex operators collectively decide to stop screening a movie to force a producer into an eight-week window, their actions cross the line into potential anti-competitive behaviour under the Competition Act, 2002.
Under Section 3(1) of the Competition Act, no enterprise or association can enter into an agreement with respect to production / supply / distribution / storage / acquisition / control of a film that causes or is likely to cause an Appreciable Adverse Effect on Competition (AAEC) within India i.e. no agreements that are anti-competitive can be introduced if they negatively impact competition in the Indian film industry. Moreover, all scenarios where such an agreement would be void have been specifically mentioned under section 3 (3) of the Competition Act, 2002, which talks about horizontal agreements i.e. agreements between businesses operating at the same level of the market (such as multiplex chains).
Thus, the directives issued by MAI to block a producer’s film can be classified as an anti-competitive practice under section 3 (3) of the 2002 Act. By jointly limiting screen availability, they artificially restrict the supply of exhibition services.
In the Indian antitrust framework, since horizontal agreements under section 3 (3) are deemed to be anti-competitive (notwithstanding the exceptions), the burden shifts to the Multiplexes to prove that their collective boycott does not harm market competition or consumer choice.
An argument that may arise in such a case is whether the mandatory eight-week rule is truly beneficial in creating efficiency. Multiplex chains state that such practice is aimed at preserving the palpable theatrical experience and creating higher demand across audiences, thereby considered to be a driver of market efficiency. Producers, however, state that a mandatory exclusivity period prevents them from recovering investments faster and that such practices adversely affect their business and their rights to trade freely.
This issue also involves Section 3 (4) of the Competition Act, 2002, which governs vertical agreements. A collective mandate that forces producers to accept a rigid window as a condition for screening movies operates as an exclusive distribution agreement under Section 3 (4) (c) or a collective “refusal to deal” under Section 3 (4) (d). These processes are assessed using a “rule of reason” analysis to determine whether they unreasonably restrict market access for the producer.
Jurisprudence thus far
The Competition Commission of India (CCI) has encountered similar industry standoffs before and has consistently protected market freedom over assertions of trade bodies.
In the landmark case of FICCI Multiplex Association of India Vs. United Producers / Distributors Forum (2011), the CCI firmly established that using a collective platform to restrict the supply of films to force commercial terms constitutes an AAEC.
A more direct precedent regarding streaming timelines emerged in Raaj Kamal Film International Vs. Tamil Nadu Theatre Owners Association (2013). When actor-producer Kamal Haasan sought to premiere his film Vishwaroopam on DTH platforms just a day before its theatrical release, the theatre association responded with a collective boycott. The CCI issued a prima facie order under Section 26 (1), stating that an association’s collective decision to ban a film because it utilises alternative digital technology limits the market for film exhibition and unlawfully prevents a producer from adopting technological innovations. The Commission observed that such actions deter the growth of alternative media and ultimately reduce consumer welfare.
Structuring Contracts
Because practices such as collective boycotts run a severe risk of violating competition law, the battle over the exclusivity period for exhibiting movies has shifted entirely to the negotiation table. Studios and multiplex chains are forced to address these conflicts through extensive contracts, using commercial risk-allocation clauses to replace blanket industry bans.
If a film performs poorly at the box office during its opening week, certain contractual triggers may be introduced to allow the producer to pay a pre-negotiated fee or accept a reduced theatrical revenue share in exchange for accelerating its OTT release. Conversely, the contract may include a notable negative covenant under the Indian Contract Act, 1872. While Section 27 of the Contract Act, 1872 declares any agreement in restraint of trade to be void, the Supreme Court of India in Gujarat Bottling Co. Ltd. v. Coca Cola Co. (1995) ruled that a negative covenant operating during the period of operation of a contract, such as an exclusive four-week theatrical window clause, is legally enforceable if it facilitates performance rather than restraining trade.
Conclusion
The imposition of the exclusivity period reflects an evolving entertainment market, driven by digital technology and shifting viewer habits. While multiplexes face genuine commercial pressure, the law is clear that the producers also hold a statutory monopoly over how their film is communicated to the public. Using collective boycotts and industry-wide bans to restrict a producer's right to exploit alternative digital platforms is legally problematic, since such actions risk being classified as anti-competitive under the Competition Act, 2002. Ultimately, the survival of the traditional theatrical ecosystem cannot be enforced through coercive methods. Instead, it must rely on market forces and collaborative commercial agreements that respect the producer’s freedom to innovate, thereby ensuring that the big screen thrives alongside the digital revolution.
Author: Diva Shah in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney
References
The Competition Act, 2002
The Copyright Act, 1957
Competition Commission of India: Case No. 01/2009 (FICCI Multiplex Association of India Vs. United Producers / Distributors Forum).
Competition Commission of India: Case No. 01/2013 (Raaj Kamal Film International v. M/s Tamil Nadu Theatre Owners Association).
SpicyIP Archives: Film release strategies and anti-competitive practices in the Indian film industry.
Comments