Recently, Ajay Devgan Films (ADF) has alleged that rival studio Yash Raj Films (YRF) have harmed the prospects of ADF’s Son of Sardaar and have further violated the provisions of the competion law by previously forcing the the exhibitors before the release of Ek Tha Tiger, in August 2012, and using their dominant position in the market to enter into an arrangement with the exhibitors saying that they will give them Ek Tha Tiger only if the exhibitors agreed to reportedly give their Diwali release prominence over others for screening Jab Tak Hai Jaan starting 13 November.
“YRF has entered into a tie-in arrangement with the exhibitors in a manner that it has made it compulsory for the exhibitors to exhibit the untitled movie of YRF on Diwali day and two weeks thereafter with all four shows,” ADF said in a statement. “A tie-in arrangement in the present circumstances of YRF of compulsory showing an unnamed movie on a date fixed in advance with the exhibitor while entering into an arrangement to show the film Ek Tha Tiger itself violates the provisions of the Competition Act, 2002, more particularly Section 3.”
Historically,the Competition Act, 2002was passed by the Parliament in the year 2002, to which the President accorded assent in January, 2003. It was subsequently amended by the Competition (Amendment) Act, 2007. Competition Act 2002 came into force to replace the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969. In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established. The Competition Commission of India (CCI) is now fully functional with a Chairperson and six members. The provisions of the Competition Act relating to anti-competitive agreements and abuse of dominant position were notified on May 20, 2009.
In accordance with various provisions of Competition Laws in India, commercial transactions or qualifying M&A transactions that meet certain revenue/turnover and asset based thresholds must be notified to the CCI prior to the closing of the transaction. As per initial threshold limit, only combinations with respect to targets that have assets of more than INR 250 Crores (appx. $56 million) or revenue/turnover of more than INR 750 Crores (appx. $167 million) need to be notified. Competition Commission of India (CCI) specifies three forms for notifying transactions to CCI, wherein Form I is used to notify transactions that are less likely to cause adverse effect on competition, Form II is more detailed and is the equivalent of a “second request”. Form III is required to be filed for acquisition by a public financial institution, foreign institutional investor, bank or venture capital fund. Additionally, certain exemptions have also been notified, wherein some categories of combinations that are unlikely to cause an appreciable adverse effect on competition in India are exempt from notification e.g., a combination taking place entirely outside India with insignificant local effects on markets in India.
Generally, among various types of agreements, an anti-competitive agreement is bound to have substantial and unfavourable effects on competition. For example, anti-competitive agreements may include, agreement to limit production and/or supply, agreement to allocate markets, agreement to fix price, conditional purchase/sale, exclusive supply/distribution arrangement, and the like.
Moreover, as per Indian Competition Laws, if a foreign entity that wishes to enter into an agreement outside India which may affect the relevant market in India, it must give a notice to the CCI in the prescribed form to establish the same.
Therefore, as it may be seen, the Competition Commission of India (CCI) has the power to extend its jurisdiction beyond the Indian shores and declare any qualifying foreign merger or acquisition which affects the relevant market in India as void. In such cases, the CCI may exercise its power by way of entering into arrangements and memorandum of understandings with the regulatory bodies of other countries in order to facilitate the entire process and related proceedings.
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