The Competition Commission of India (CCI) will once again look into alleged anti-competitive practices in the Indian film industry.

Ajay Devgan Films (ADF) has alleged misuse of dominant position by Yash Raj Films (YRF) in the Bollywood film market segment to deny ADF free market access for release of their latest films ‘Son of Sardar’ during the coming Diwali festival.

Vide a notice filed on October 18, 2012, ADF alleged that YRF had made exhibitors agree to monopolistic pre-conditions at the time of release of its last film ‘Ek Tha Tiger’ that such exhibitors would give preference and priority to YRF’s Diwali release over others.

Bollywood film market is not new to allegations of or attempted abuse of dominance and monopolistic behaviour.

On an earlier occasion, CCI had to intervene in July 2009 by initiating a cartel investigation against Bollywood film producers and distributors on a plea by multiplex companies alleging anti-competitive practices and cartelization and misuse of dominance in film distributions & revenue sharing amongst Bollywood film produces, distributors and multiplex owners.

The CCI had then pointed out that Bollywood producers and distributors could not have arrangements which violated free market environment for multiplex owners and had imposed fine in the region of 10% of revenues on the producers and distributors.

With the intervention of CCI, a nearly two-month logjam and strike of multiplexes came to an end after costing the film industry nearly Rs. 300 crores plus in losses.

Having received tutorials from CCI, why is the ugly face of anti-competitive practices, monopolistic practice and abuse of dominance coming to the fore again and who is impacted by these practices:

Consumer/Cinema Viewer:
A consumer, in this case a cinema viewer, is denied free access all available movies released by the film industry as movies of only dominant producers is screened at multiplexes and other movies do not get screened or get screened much later. 

Competing Bollywood Film Producers:
Competing Bollywood film producers are not able to get free access to the cinema Viewer market and to exhibitors/multiplexes thereby putting them to disadvantage and making there cinema projects unviable.

Competing Bollywood Financiers, Actors & Advertisers:
Competing Bollywood financiers, actors & advertisers are not able to get free access to the cinema viewer market and to exhibitors/multiplexes thereby putting them to disadvantage and making there cinema projects and investments unviable.

Bollywood Cinema has always been identified with blockbuster movies from old production houses like Yash Raj Films, Ramesh Sippy, Karan Johar etc to name a few.

While there is no denying that the reputation of these production houses is a result of hard work and their performance over the years, or in most cases, over decades – it would be wise to note that as long as the performance of their movies is based of the content of the cinema or even advertising in the free market space, their could hardly be any issues. 

This scale of success and acceptance by cinema viewers obviously does not seem to satisfy some Bollywood producers if allegation of anti-competitive practices as discussed above are believed to have any merit. 

The purported onset of monopolistic arrangements to acquire advantage over competitors and also thus denying free market and free access to competitors, stakeholders and cinema viewers, has led to issues of these anti-competitive practices being raised and looked into by the CCI.

Hollywood has also had its share of allegation of anti-competitive practices and its consequential impact of stakeholders and the industry, which have led to rulings on the issue from courts as follows. 

In a 1946 ruling of RKO Radio Pictures, the United States Supreme Court held an arrangement  to be anti-competitive (anti-trust laws as known in the USA) wherein  a movie was distributed only among   multiplexes owned by parties to this arrangement who were then able to exclusively show those movies during a certain ‘first run’ period before  other multiplexes screen the same movie. 

Subsequently, in 1948, the United States Supreme Court passed the landmark Hollywood Anti-trust case ruling that changed the future of working of the Hollywood Film producers also owning their own multiplexes and retained exclusive rights as to which multiplex  would show their films and which would not. The 1948 ruling held that such monopolistic practices were in violation to competition (anti-trust laws as known in the USA) which did not allow such exclusive arrangements. This landmark ruling  changed the way cinema production, distribution and exhibition was done in Hollywood permanently.

The lessons from Hollywood however seem to be mixed from the industry impact perspective. Skeptics say that competitiveness in the post 1948 judgment era did not increase the quality of movies  but only resulted in the industry being on the edge of viability for the next 16-17 years. The positive outcome of course was the emergence of a new breed to producers bringing in fresh shots of creativity over the years, which is still continuing.

In India, as consumers, cinema viewers have precious little to get from the CCI for violation of their rights of free choice by anti-competitive arrangements, but all stakeholders look up to CCI to correct any encroachments on the free market and free choice space, which is the in-evitable way forward  in the long run.

The author is a corporate law expert and managing partner of Hammurabi & Solomon. He can be reached at [email protected]