NEW DELHI: Ajay Devgn Films has received a setback with the Competition Commission of India (CCI) ruling that Yash Raj Films‘ (YRF) agreements with single screen exhibitors was not in contravention of the Competition Act.

The CCI said the agreements entered into in July/August by YRF with single screen theatres were not anti-competitive.

In its petition, Ajay Devgn Films had pointed out that during the release of Salman Khan-starrer ‘Ek Tha Tiger‘ on 15 August, YRF and its distributors had taken an undertaking from single screen theatres that they would also exhibit the film ‘Jab Tak Hai Jaan‘ by the same producer during Diwali.

Ajay Devgn Films alleged that it was laid down that any single screen theatre which did not agree to exhibiting ‘Jab Tak hai Jaan‘ would not get to screen ‘Ek Tha Tiger‘.

CCI was also informed that some single screen theatres did not agree to the YRF‘s condition.

The Commission said, “The act of booking theatres by a distributor for its two films simultaneously when the theatre owners have the liberty either to agree or not to agree, is not a restraint on the freedom of business of theatre owners. The theatre owners can wait for other films and can refuse to book their theatres simultaneously for two films. Even otherwise, the non significant position held by the single screen theatres does not cause any adverse effect on the competition.”

Furthermore under the Act, tie-in arrangements per se are not violating of section 3(4)(a) of the Act.

“If many high ticket mega starrer films compete with each other to be released only on the occasion of festivals, the choice lies with the theatres and each theatre is at liberty to book its theatre even in advance and it cannot be said that this had appreciable adverse effect on the market. The subject of appreciability is of huge practical importance for competition,” it added.

The Commission said according to its information, even single screen theatres in some of the states are further sub-divided in category A, category B and category C and the distributors discriminate between these categories and do not allow release of new films in category B or category C theatres and only choose category A theatres.

‘Thus the market of exhibition of new films on single screen theatres in the context of this case is not of enough significance to cause an appreciable adverse effect on the competition. Even otherwise, the market cannot be restricted to any particular period like Eid or Diwali and the market has to be considered a market available throughout the year.‘

Justice S N Dhingra and members H C Gupta, R Prasad, Geeta Gouri, Anurag Goel, and M L Tayal said Ajay Devgn Films did not place on record data either of market share or of economic strength to show how the opposite parties were dominant in the proposed relevant market on the basis of above stated guiding factors.

It was argued by the counsel for the informant that the opposite parties were dominant because Yash Raj Films was a big banner production house and had a big name and had given several blockbuster films.

But the Commission said, “No enterprise can be considered dominant on the basis of big name. Dominance has to be determined as per law on the basis of market share, economic strength and other relevant factors stated under Section19 (4) of the Act.”

The Commission said it was unable to accept ‘such a narrow approach‘ while determining the relevant market. A large number of movies are released in India every year. In Bollywood itself, 107 and 95 films were released in 2011 and 2012 (till now) respectively. Out of this, Yash Raj Films produced only two to four films each year. ‘This cannot be said to amount to dominance even in the Bollywood industry, leave aside film industry in India.‘ Therefore, the claim of Ajay Devgn Films that Yash Raj was a dominant player in the film industry in India cannot be accepted, it said.

Ajay Devgn Films had alleged that the YRF agreements were in violation of section 3 as well as section 4 of the Competition Act. It submitted that ‘Ek Tha Tiger‘ was released at the time of Eid and ‘Jab Tak Hai Jaan‘ is to be released at the time of Diwali.

‘This grievance of the informant arose because the informant feared that he would not get enough theatres for his own film ‘Son of Sardar‘ because of the agreement of single screen theatres with the opposite parties at the time of releasing Ek Tha Tiger. Ajay Devgn Films contended that the agreement between the opposite parties and the film exhibitors for exhibition of the two films together amounted to contravention of section 3(4)(a), 3(4)(b) and 3(4)(d) as well as contravention of section 4(2)(a).