The Competition Commission of India(CCI) has dismissed a complaint alleging anti-competitive practices by FICCI Multiplex Association and four multiplex chains, including PVR Ltd and Inox, according to an order passed on Wednesday.
Four multiplex chains, PVR Ltd, Inox, Cinepolis India Pvt Ltd and Carnival Motion Pictures, are members of FICCI Multiplex Association of India which promotes the interest of multiplexes and theatre operators.
Unilazer Ventures Pvt Ltd through its division RSVP, an independent film content creation company, in a complaint had charged the association and its members of collusion to enforce a revenue share model on producers and distributors and levying a fee beyond the agreed period.
The CCI, however, dismissed the complaint due to lack of evidence to prove collusion among the multiplex chains, according to the CCI order.
The complainant stated that the Virtual Print Fee (VPF) is paid by the film producer/distributor to single screen theatres and multiplexes for purchasing digital cinema projection equipment for screening of the film.
RSVP alleged that the VPF model was agreed upon by the producers/ distributors with a sunset period, in a move to reduce the cost of physical prints incurred by them to curb piracy and improve quality of cinema viewing experience.
However, despite the agreed period being long over, multiplexes have continued to charge the VPF even after the sunset period, it alleged. Besides, four entities do not negotiate on VPF individually, but do so collectively, owing to anti-competitive agreement amongst them.
The complainant further alleged that the four multiplexes under the aegis of FICCI Multiplex Association have been colluding among themselves to put forth a revenue sharing agreement that is non-negotiable, among others.
By doing so the entities violated Section 3 of the Competition Act which pertains to anti-competitive agreements, the complainant alleged.
Regarding the VPF, the CCI said the practice originated from Hollywood and was adopted in Indian cinema as well without any formal or written agreement. "Since there is no written agreement, as a corollary, the question of formal arrangement of 'sunset-clause' does not exist".
While as far as the anti-competitive collusion is concerned, CCI said, "no indication of any such agreement or arrangement or understanding between the OPs (five entities) has been placed on record."
The fair trade regulator noted that there is no evidence to indicate that four multiplexes met under the aegis of FICCI Mutliplex Association or used its platform to arrive at a common VPF to be charged from producers.
Pertaining to revenue sharing agreements, CCI said, "The Commission observes that the revenue sharing arrangement was put in place with the consent and due deliberations between producers and multiplex owners and the informant (complainant) has not been able to demonstrate that such an arrangement is pursuant to any anti-competitive agreement among opposite parties" (five entities).
Similarly, the regulator dismissed other allegations due to lack of evidence.
Accordingly, "the Commission is of the opinion that there exists no prima facie case warranting investigation into the matter", CCI said.
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