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ajay devgan v. yash raj films.pptx
- 1. AJAY DEVGAN FILMS V. YASHRAJ FILMS PVT. LTD. & ORS. - MAINAK CHANDRA 1LLMCCL (2257110)
- 2. FACTS OF THECASE The opposite party released its mega starrer film Ek Tha Tiger on 15th August, 2012. At that time the opposite parties were contemplating to release another film named Jab Tak Hai Jaan (JTHJ) at the time of Diwali. The opposite parties before the release of Ek Tha Tiger had put a condition on single screen theatres that if they wanted to exhibit Ek Tha Tiger, they would have to simultaneously agree to exhibit the other film JTHJ at the time of Diwali. While some theatres entered into agreement with the opposite parties for exhibition of both the films, namely Ek Tha Tiger and JTHJ, some did not agree to this and did not enter into the agreement.
- 3. CONTENTIONS BY THEINFORMANT The informant contended that Ek Tha Tiger being a big-starrer film, its exhibition was profitable for the single screen theatres. Thus, majority of single screen theatres entered into agreement for exhibition of both the films because of the big name and dominance of opposite party. The informant feared that he would not get enough theatres for his own film Son of Sardar. The informant contended that threat of not allowing any one of the film to be exhibited if contract for exhibition of both were not entered at the same time amounted to abuse of dominance. The informant alleged that this was violation of both Section 3 as well as Section 4 of the Competition Act, 2002 and filed a complaint.
- 4. …..CONTINUED The informant contendedthat the agreement between the opposite parties and the film exhibitors for exhibition of the two films together amounted to contravention of the following sections 3(4)(a), 3(4)(b), 3(4)(d) and 4(2)(a). Sec. 3(4)(a) – tie-in arrangement Sec. 3(4)(b) - exclusive supply agreement Sec. 3(4)(d) – refusal to deal ; also Sec. 4(2)(a) - directly or indirectly, imposes unfair or discriminatory— (i) condition in purchase or sale of goods or service; or (ii) price in purchase or sale (including predatory price) of goods or service.
- 5. ISSUES DEALT BYCCI Whether the agreement amount to be a tie-in vertical agreement ? Whether tie-in agreements are violative per se? Whether the agreement is having an appreciable adverse effect on competition? Whether the opposite parties were dominant in the relevant market of ‘film industry’ in India’?
- 6. FINDINGS BY THECCI Q. Whether the agreement amounted to be a tie-in vertical agreement ? The impugned agreement between distributors and exhibitors is vertical in nature as they operate at different levels in the value chain of film business. It was regarded to be a tie-in arrangement because the opposite parties tied its earlier release with its forthcoming release with the single screen holders.
- 7. …..CONTINUED Q. Whether tie-inagreements are violative per se? Commission clarified the fact that though the said agreement between the opposite parties and the exhibitors are tie-in in nature but the same are not violative per se. Tie-in agreements need to have an appreciable adverse effect on competition (AAEC) to become violative. AAEC needs to be calculated based on the guiding factors laid as per section 19(3) of the Act.
- 8. Section 19(3) ofthe Competition Act, 2002 The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:— (a) creation of barriers to new entrants in the market; (b) driving existing competitors out of the market; (c) foreclosure of competition by hindering entry into the market; (d) accrual of benefits to consumers; (e) improvements in production or distribution of goods or provision of services; (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.
- 9. …..CONTINUED Q. Whether theagreement is having an appreciable adverse effect on competition? The Commission held that the impugned agreement has neither created entry barriers for new entrants nor drove existing competitors out of the market, nor is there any appreciable effect on the benefits accruing to the ultimate consumers viz. the viewers. The Commission further stated that some single screen theatres refused to enter into such an agreement and were free to screen any film they wished to, including that of the informant. The multiplexes are not constrained from exhibiting informant’s film and on those single screen theatres which did not enter into agreement with opposite parties. As per the report of DG, it was found that single screen theatres contribute only 35% of revenue and multiplex theatres contribute about 65% of the revenue. Thus, CCI concluded that they were not violative of Sec. 3 of the Competition Act, 2002.
- 10. …..CONTINUED Q. Whether theopposite parties were dominant in the relevant market of ‘film industry’ in India’? The informant failed to substantiate how 'film industry in India' was the relevant market and how the opposite parties were dominant in this relevant market. The informant did not place on record data either of market share or of economic strength to show how the opposite parties were dominant in the proposed relevant market based on the guiding factors laid under Section 19(4) of the Act. Therefore, CCI held that the claim that opposite parties were dominant players in the 'film industry in India' cannot be accepted just based on the factor of them having “big name”. Thus, there is no prima facie contravention of Section 4 of the Act.
- 11. CONCLUSION Thus, the Commissionheld: The parties to the agreement took a legitimate commercial decision. The agreements have not curtailed informant's right to screen its film altogether. The impugned agreement is purely commercial in nature between parties promoting their economic interests and as such does not affect any particular market. The impugned agreement, therefore, does not amount to be anti-competitive.
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