Any delay in action invariably favours the status quo and it seems that odds are stuck against T-series in this case.

T series (‘Super Cassettes Industries Private Limited’), maker of the ‘Bhool Bhulaiyaa 3’, has recently filed a competition complaint against Rohit Shetty Picturez and other producers of ‘Singham Again’. The complaint has been filed due to alleged distortion of fair play in the market and denial of equal distribution of screens when it comes to the exhibition of ‘Bhool Bhulaiyaa 3’ and ‘Singham Again’. Both the movies are relatively star-studded and due to be released this Diwali to take on a head-to-head clash at the box office.

What is the dispute about?

One of the major sources of film revenue is from exhibition of the same on screens. Given that Diwali is a rush-time, both the makers seek to reap the maximum dividend by occupying the majority of the screens at multiplexes. While the theatres could rearrange the number of shows available for each movie based on the demand on a later demand, the competitive edge of moving first isn’t lost. It is important from the perspective of producers as well that theatre screens are one of the major entry points when it comes to accessing the market.

Why is CCI being moved?

The Competition Commission of India (CCI) is the nodal agency to ensure fair play in the market. The CCI through relevant provisions under the Indian Competition Act can look into unilateral, as well as multilateral conduct under elaborate mechanisms such as cartels, non-horizontal restraints and abuse of dominance to issue punitive orders enforceable under the law. These remedies could take behavioural and structural form on a case-to-case basis wherever the CCI is of the opinion that commercial entities are engaging in monopolistic practices to the detriment of competition in the market. The CCI is further empowered to take suo moto action and advocacy measures where it could combine its soft powers to educate the market players on the importance of competition and ensure that any course correction happens in a timely manner.

Likely outcome

There are broadly three stages in the film industry, i.e. production, distribution and exhibition. Competition concerns around production and distribution of films have been agitated since long at the CCI. For instance, in the Reliance Big Entertainment Private Limited case (2013) the Informant alleged that any attempt by the multiplexes to block a film from exhibition would amount to arbitrary action and abuse of dominant position. Similarly in the Film & Television Producers Guild of India case (2011), the Informant alleged that multiplex owners demand an exorbitant high share of the revenues generated out of exhibition among other one-sided conditions. While the Commission held that the Respondents were in violation of the law in the former, it held that there is no case being made out against multiplex owners in the latter and closed the same.

The issue raised by the T-series isn’t precisely novel. Ajay Devgn films, which is the respondent in the current case, was against Yash Raj films in 2012 where it alleged that the production house is trying to dictate terms to various movie theatres and get the maximum share of screens for its movies (‘Ek Tha Tiger’ and ‘Jab tak Hai Jaan’). This was alleged to the detriment of competitors, including the Informant who was about to release ‘Son of Sardaar’ at the same time. The CCI opined that the producer and film distributors negotiate the terms of contract on a case-to-case basis and distributors are free to walk away wherever they feel the terms of contract are unfavourable. The CCI held that there is no distortion of competition in the market and as such dismissed the matter.

Given that the dispute is around distribution of screens at the time of Diwali which is just round the corner, time would be of essence in this case. The typical lifecycle of a complaint at the CCI involves preliminary inquiry, if not detailed investigation, and multiple exchanges of notice even if reliance is paid on precedent. Given the timelines involved, it is unlikely that such a procedure would be followed in this case. Thus, the most plausible option to act, if at all the CCI does, would be on a prima facie basis and invoke its exceptional powers under section 33 of the Act to intervene in the matter before it becomes fait accompli. Given the exceptional circumstances, it though remains unclear to what extent the CCI would be able to grant relief even under its interim powers. Getting a 50-50% screen share remains a long shot. Any delay in action invariably favours the status quo and it seems that odds are stuck against T-series in this case.