Compat again overrules CCI in plea against Warner Bros, others

In a strongly-worded order, the Competition Appellate Tribunal said CCI committed serious error by declining to order an investigation

For the second time in less than a year, Compat has set aside the Competition Commission's decision to reject a complaint of alleged unfair business ways made against Warner Bros, Walt Disney, Fox Star Studios and four other entities.

The complaint filed by K Sera Sera Digital Cinema against the seven entities was rejected by the Competition Commission of India (CCI) after concluding that there was no prima-facie violation of competition norms. The watchdog dismissed the allegations twice, in April 2015 and June this year.

The seven entities are US-based Digital Cinemas Initiatives LLC, a joint venture, and its six stakeholder partners — The Walt Disney Company India, Fox Star Studios, NBC Universal Media Distribution Services, Sony Pictures, Warner Bros and Paramount Films India (respondents).

In a strongly-worded order, the Competition Appellate Tribunal (Compat) said CCI "committed serious error by declining to order an investigation".

"Rationally speaking, it would have saved time and efforts of all those involved in this matter if the Commission had ordered an investigation by the director general instead of once again more or less reiterating its earlier views," the Tribunal said in the order.

Compat said the "impugned order is set aside and the Director General is ordained to conduct investigation into the allegations contained in the information filed by the appellant (K Sera Sera)".

The investigation shall be conducted in accordance with the provisions contained in the Competition Commission of India (General) Regulations, 2009, the Tribunal noted.

It was alleged that these entities indulged in anti-competitive practices in the digital cinema exhibition market.

In April 2015, CCI dismissed the allegations and K Sera Sera approached the Tribunal, which asked the regulator to reconsider the matter.

With CCI rejecting the complaint for the second time, the Tribunal was again approached following which the latest order has been passed.

Noting that the respondents' argument is "strange and prima-facie anti-competitive", the Tribunal said "on the one hand, the respondents claim that their technology is voluntary, on the other they create potential entry barriers by releasing their films only to those who opt for digital technology".

It noted that CCI has taken an "irrational position" on the relationship between non-availability of Hollywood movies and growth of K Sera Sera's business.

"The explanation for this view offered by the Commission smells of pre-liberalisation stance on size of business which are no more relevant unless the size of business is used to create abusive impact on competition in the market," it added.

Among others, it was alleged that Digital Cinema has been formed with an object to dominate and monopolise the market of digital cinema exhibition in India and elsewhere.