‘Film and Television Market’: Did the Coordination Committee case err in defining the ‘Relevant Product Market’?
This article argues that in Karnataka Film Chamber of Commerce case, the Competition Appellate Tribunal (COMPAT) erred in determining the relevant product market. The Appellate Tribunal in the said ruling upheld the delineation done by the Competition Commission of India (CCI) and said that the Film and Television industries comprise one single Relevant Product Market (RPM).
The question of RPM came up when the informant, i.e. Kannada Grahakara Koota, alleged that the opposite parties, led by Karnataka Film Chamber of Commerce, have used their market power to prohibit broadcasting of dubbed Kannada films and tele-serials, thereby violating Section 3(1) and 3(3)(b) of the Competition Act, 2002. The line of reasoning adopted by the Appellate Tribunal was that the RPM comprises of all goods/services considered substitutable by the consumer. The suppliers compete for the consumers and films and television cater to the same audience of entertainment industry. The films are not only exhibited in theatres, but are telecasted on TV channels as well. Since the aim of television industry is also to monetise films, films exhibited in theatres and telecasted on television become substitutable. Consumers seek entertainment through both the mediums, and are free to make choices based on price, preference and other characteristics. To elaborate its stand, COMPAT even relied on Co-ordination committee case where it was held that the sweep of the action be considered while determining the RPM. On the application of same, it would emerge out that the opposition to dubbed content was not only present in television series, but had film industry in its ambit as well.
Now even though the Tribunal’s stand is backed by precedent, facts of the said case require closer examination of definition of RPM. As per section 2(t) of the Act, it comprises of all those products or services which are regarded as interchangeable or substitutable by the consumer. It requires emphasis that the definition give clear preference to demand side substitutability. Hence, if the sweep of action test laid down by the Supreme Court in Coordination Committee case is adopted, it may enlarge the ambit of the RPM, in many situations, to an extent which the legislature could have never envisaged. In a hypothetical scenario, if Association of Manufacturers of Leather Shoes from Karnataka, in the background of Cauvery river water dispute, asks its members to stop importing leather from Tamil Nadu in light of leather processing being a water-intensive activity, it might have unforeseen circumstances. The said bar would not only affect the shoe industry, but disturb the whole apparel market. On application of sweep of action test, shoes and apparel products would become substitutable, thereby questioning the basic market understanding of 'product'.
Below diagram shows the relationship:
As displayed, there are three RPMs, i.e. films broadcasted in a cinema hall, films telecasted through television and television serials. Product A is part of film market, product C is part of television market and product B is part of both television and the film market.
Now the question arises is, how far are these products interchangeable or substitutable, so as to make them part of one RPM. If the price of Product A increases, it is likely they would switch to Product B given that it’s an overlapping area, however shift to product C is less probable. Similarly, the users of Product C may switch to B for the same reason, and not to product A. Users of product B have the advantage of moving to both A or C, given its center position. Therefore by this reasoning, it can be concluded that all the products of television market may not be considered substitutable by the consumers with products of the film market. Only a part of the latter is substitutable with the former because of the overlap.
Determination of relevant market is not mandatory for Section 3 violation cases. However the analysis is important from the perspective of competition in film and television industry. A substantial number of abuse of dominant position cases get overturned at the COMPAT at the very first stage, i.e. definition of relevant market, and therefore a detailed understanding of the sector would help the researcher appreciate nuances of Indian competition law better.