CCI Fines Film Associations Once Again

On August 30, 2018, CCI imposed a penalty on Karnataka Film Chamber of Commerce (‘KFCC’), Kannada Okkuta (‘Okkuta’) and their officials for indulging in practices that were in violation of Section 3(1) and Section 3(3)(b) of the Act. [1]

The information was filed by Mr. G Krishna Murthy, a former member of KFCC (‘Informant’). As per the information, the Informant is engaged in the business of production and distribution of films in Karnataka and KFCC is a society of producers, directors, technical staff, distributors and exhibitors of Kannada films in the State of Karnataka and Okkuta is an unregistered organization formed for the protection of Kannada language and culture.  The Informant had alleged that KFCC and Okkuta had been consistently obstructing him from exhibiting and distributing, Tamil films namely, ‘Yennai Aridhal’ and ‘Sathyadev IPS’ (dubbed in Kannada) in the State of Karnataka. Further, KFCC and Okkuta had also threatened the Informant through social media and newspaper interviews, of retributive actions in the event that the films were released in theatres. In order to make his case, the Informant relied on CCI’s decision in Kannada Grahakara Koota and Anr. v. Karnataka Film Chamber of Commerce[2], penalizing KFCC for indulging in similar activities.  The Informant also relied on the Supreme Court’s order in Competition Commission of India v. Co-ordinated Committee of Artists and Technicians of W.B. Film and Television and Ors.[3]  that upheld CCI’s penalty on an organization analogous to KFCC, based out of West Bengal, for indulging in anti-competitive activities similar to the ones that were impugned in the information. Based on its prima facie opinion of a violation, CCI directed a the DG to investigate the matter through an order dated September 14, 2017 and the DG submitted a detailed investigation report (‘IR’) to CCI on April 04, 2018.

In its decision, CCI relied on various social media statements made by KFCC and Okkuta, including through the medium of Twitter, YouTube, statements of officials of KFCC and Okkuta, third party statements, and other evidence adduced by the DG to determine that KFCC and Okkuta had been making incendiary remarks directed towards the films dubbed by the information. Based on the same, CCI was of the opinion that KFCC, Okkuta and their officials had been acting in agreement (tacit) with the objective of restricting the distribution and exhibition of dubbed films in Karnataka. CCI further noted that such conduct was anti-competitive, as it reduced consumer choice and created entry barriers for films dubbed in languages other than Kannada.

More specifically, CCI relied on the fact that KFCC and Okkuta officials had organized a press meet right before the release date of ‘Sathyadev IPS’, with the intention of hampering the release of the Informant’s film. In this regard, CCI rejected the contention that the purpose of the press meet was not as was recorded in the IR, and observed that in such cases the general nature of press meets needs to be pierced through to see the purpose behind them. As per CCI, this press meet was the ‘connecting link’ that showed the unity of cause and a meeting of minds of KFCC and Okkuta officials, as was required under Section 3(3) of the Act.

CCI also rejected KFCC’s contention that the ban on dubbed films was justified in order to protect Kannada language and literature and to ensure livelihood for artists active in Kannada film industry. As per CCI, irrespective the cause, the impugned activity of banning and obstructing the release of dubbed films within Karnataka was in violation of Section 3(1) and Section 3(3)(b) of the Act. CCI reiterated that the presumption of AAEC under Section 3(3) was rebuttable, and observed that KFCC had failed to provide any justifiable basis for the impugned activities. Additionally, based on the abovementioned observations, CCI also concluded that KFCC had also been continuously violating the directions of CCI as specified in Kannada Grahakara Koota and Anr. v. Karnataka Film Chamber of Commerce[4] by way of its order dated July 27, 2015.

In its assessment of the penalty to be levied, CCI considered aggravating factors such as the fact that KFCC had consistently been violating the provisions of the Act and had been penalized by CCI on numerous occasions.[5] CCI also noted the fact that KFCC had failed in bringing out a competition compliance manual in abrogation of CCI’s order in Kannada Grahakara Koota and Anr. v. Karnataka Film Chamber of Commerce.[6] Accordingly, CCI imposed a penalty at 10% of the average of the income of KFCC, Okkuta and their officials for the past three years, respectively and also directed KFCC to bring out a competition compliance manual.

[1] Mr. G. Krishnamurthy v. Karnataka Film Chamber of Commerce (KFCC) & Others, Case No. 42 of 2017 (Order date August 30, 2018)

[2] Kannada Grahakara Koota and Anr. v. Karnatake Film Chamber of Commerce, Case No. 58 of 2012 (Order dated July 27, 2015)
[3] Competition Commission of India v. Co-ordinated Committee of Artists and Technicians of W.B. Film and Television and Ors., Civil Appeal No. 6691/2014
[4] Kannada Grahakara Koota and Anr. v. Karnatake Film Chamber of Commerce, Case No. 58 of 2012 (Order dated July 27, 2015)
[5] Case Nos. 25, 41, 45, 47, 48 of 2010; Case No. 56 of 2010 and Case Nos. 56 and 71 of 2011
[6] Kannada Grahakara Koota and Anr. v. Karnatake Film Chamber of Commerce, Case No. 58 of 2012 (Order dated July 27, 2015)

Published In:Inter Alia Special Edition Competition Law Third Quarter 2018 [ English
Date: September 30, 2018