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CCI order in the malayalam film industry case takes selective cognisance of the violations

Sarayu Srinivasan

Going by the Competition Commission of India’s order dated March 24, 2017, four Malayalam film industry unions namely, Association of Malayalam Movie Artists (AMMA), Film Employees Federation of Kerala (FEFKA), FEFKA Director’s Union and FEFKA Production Executive’s Union were penalized for boycotting a competitor in violation of Section 3(3)(b) of the Competition Act. In addition to penalty imposed on the Mollywood trade unions, the CCI also found some office bearers of those mentioned in the opposition party guilty under Section 48 of the Act for spearheading in anti-competitive conduct of their respective organization.

The claim here is that the decision of CCI under Section 48 in the case is lopsided. CCI has immunized itself from any controversy by not including the more powerful bloc among the accused. That is, it does not penalize industry veteran actors- Mr. Mohanlal, Mr. Mammootty and Mr Dileep, who are clearly mentioned as opposite party by the informant and these are people who are explicitly accused by Late actor Thilakan, whose last phase of career was also (allegedly) affected by the unfair conduct of non-penalized members of AMMA. The CCI nonchalantly claims that it did not find any prima facie evidence of misconduct and openly states that it is not going to dig into their involvement. This shows that CCI has been selective in its investigation in to the case.

The details of the proceedings show that the CCI did not do enough to establish proof against these three persons. This is despite the fact that evidence of involvement could have been easily established from documents. For instance Mohanlal, who is General Secretary of AMMA, has clearly stated that he is also the Chief Executive Officer of the Association and has signed all major documents of AMMA, “including income tax returns”.

The question is, if the president and secretary of an organization have been accused of behaving in a cartel-like manner, why not penalize the general secretary who also holds an extra responsibility of being the CEO of the union?

Based on the details given in the case there is not much of evidence against Mammootty and Dileep, simply because the CCI did not bother to dig into documents. This means that they could avail immunity under the proviso given in Section 48(1) of the Act, where the opposite party is not found guilty if the act was carried out without his notice or if he did all he could to stop it while in office. However, Mohanlal was an office bearer for almost 12 years, and it is unlikely that anything could have taken place without his notice or his participation given that he signed every document including the minutes of the meeting which has been taken in as evidence against other office bearers of AMMA found guilty under Section 48.

This perhaps means that the same standard of investigation has not applied to veteran actors like Mohanlal, Mammootty and Dileep as to the persons holding positions such as president and secretary of AMMA. It is also said that Mammootty is a supporter of CPM, and actively participates in their campaigns. This was also an underlying reason for CPM politician M.A. Baby for not taking the informant’s complaint seriously years before he could approach the commission.

Hence, it is seen that the CCI shows a blind eye to accused with political clout and industry support. If one has to take this case as precedent, it is apparent that the minority and the “less powerful” persons or organisations in terms of money and fame are vulnerable to be penalized. This issue was also brought up by Mr. Vinayakumar after the order was issued, however there have been no signs of him further proceeding with an aim to issue a penalty against Mohanlal, Mammootty and Dileep. Even though he clearly names these three actors in his allegation that they were displeased with his plans of introducing new actors for a series of low budget movies, and accuses them of getting the industry to come to a tacit understanding to not cooperate with him and due to this he incurred a loss for close to a decade.

The penalty imposed by the CCI of three per cent of the income tax return is also on a dubious ground. This is because the informant has borne the brunt of cartel-like behavior for over a decade and the said penalty levied will hardly compensate for the loss he has faced, more so in the light of statutory provision which allow the commission to impose a penalty of up to 10 per cent. CCI should have considered other factors before using its power to impose lesser penalty under Section 46. The section allows for lesser penalty provided there has been cooperation from the opposite parties in the investigation. However, reports have revealed that these accused office bearers were presented with a show cause notice by CCI for non-appearance.

Within the purview of the case, the CCI seems to be less consistent with its investigation and order. There is need for the commission to be more robust in its processes, more so when the informant received is against individuals enjoying political clout and industry support. Not only such individuals are able to influence the course of investigation, but can eventually lead to high financial losses to the prominent players operating in the said market.