‘UFO moviez’ abused dominance by restricting ‘DCE’ from playing films that weren’t processed by its subsidiary Co.

Case Details: CPF Digital Media Services Ltd. v. UFO Moviez India Ltd. - [2021] 132 taxmann.com 178 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta, Chairperson
  • Ms. Sangeeta Verma and Bhagwant Singh Bishnoi, Member
  • Ms. Nancy Roy, Ms. Niyati Kohli, Ms. Megha Bengani, Shashank Trivedi, Advocates, Niraj Sanghai, Authorised Representative, Arun Kathpalia, Senior Advocate, Ms. Bani Brar, Karan Singh Chandhiok, Avinash Amarnath, Upender Thakur, Advocates, Rajesh Mishra, Party-in-person, Zameer Nathani, Party-in-person, Tejveer Bhatia, Rahul Rai, Ms. Prachi Agarwal, Salman Qureshi, Advocates, Sanjay Jain, Party-in-person, Bharat Budholia, Ms. Aishwarya Gopalakrishnan, Advocates and Ms. Mahalakshmi. S., Party-in-person for the Appearing Parties.

Facts of the Case

In the instant case, the Informant was engaged in the business of post-production processing of cinematograph films. Opposite Party (UFO Moviez) was a company involved in the supply of Digital Cinema Equipment (DCE) to Cinema Theatre Owners (CTOs).

The opposite party (OP) was having a market share of 30 to 40 percent in the market for the supply of Digital Cinema Equipment (DCE), which was required to play digitally distributed cinematograph film by Cinema Theatre Owners (CTOs).

The informant had alleged that OP had agreed with CTOs, to supply DCE on lease to CTOs. As per said agreement leased to CTOs have been disabled from accepting content from any source other than ‘Scrabble’ subsidiary of OP.

The informants also alleged that the impugned agreement directs CTOs to refuse to deal with any producer of a cinematograph film who had not got his cinematograph film post-production processed by ‘Scrabble’.

According to the informant, this refusal to deal had been occasioned through a technical barrier inbuilt by OP into the DCE. This technological addition to DCE was involuntary on behalf of CTOs because OP had created this by deviating the said DCE from international standards and thus had contravened the provisions of section 3(4)(d) i.e refusal to deal.

The informants, also submitted that through agreement, OP was causing an appreciable adverse effect on competition in India as it had foreclosed existing competitors like informants and had created barriers against new entrants in the market for post-production processing.

CCI Held

Based on the above, the CCI observed that the imposition of said restraints amounts to a contravention of section 3 and section 4 of the competition act, which is prima facie found to enjoy market power in the market.

Accordingly, CCI directed the Director-General (DG) to cause an investigation to be made into the matter under the provisions of section 26(1) and to complete the investigation and submit the investigation report within 60 days.

List of Cases Referred to

• • UFO Moviez India Ltd. v. Union of India [Company Appeal (AT) No. 48 of 2019, dated 24-10-2019] (para 6)
  • Ravi Walia v. UFO Moviez India Ltd. [CS (Comm) 233 of 2019, dated 1-10-2019] (para 8)