TMI Blog2013 (4) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... to secure a claim of their member. Held that - On a plain reading of the aforesaid circulars/letters, it is evident that the opposite party associations through these circulars/letters tried to limit/control the supply of the film in contravention of the provision of section 3 (1) read with section 3(3)(b) of the Act. By virtue of the provisions contained in section 3(3) of the Act, any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which (a) directly or indirectly determines purchase or sale prices; (b) limits or controls production, supply, markets, technical development, investment or provision of services; (c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way; (d) directly or indirectly results in bid rigging or collusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istributors by threatening their members of serious consequences for exhibiting films of a distributor who is not a member of any of the opposite party associations or whose film is not registered with them. On account of such threats, the cinema exhibitors who are neutral parties are unwilling to undertake the risk of exhibiting the film of a distributor who is not a member of the opposite party associations or whose film is not registered with them. It is further alleged that although the distributors only acquire the theatrical distribution rights of the films, these associations make those distributors sign their standard form of registration which has clauses putting an undertaking of the distributors not to exploit other rights of such film (satellite rights/home video rights etc.) for a certain period. It is averred that the distributors of the films have no choice but to sign these forms even when they don't have any control over other rights of such films other than theatrical exploitation rights. 4. Coming to the specific grievance of the informant, it is averred that the opposite party No.1 vide its circular dated 10.09.2011 directed its members not to release the film ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettle the disputes, it was found by the DG that these associations were coercing the producers/members to follow their directions. These opposite parties were found to be indulging in anti-competitive practices with regard to limiting and controlling provisions of services of film distribution and exhibition. Further, the opposite party Nos. 1 2 and 4 were found to have restricted the market of film distribution in their territories by taking decisions to not deal with film 'Mausam' unless their directions are obeyed. The aforesaid anti-competitive activities of these opposite parties were found to be anti-competitive in contravention of the provisions of section 3(3)(b) of the Act. However, no contravention of the provisions of the Act was found against the opposite party Nos. 3 and 5. 8. The Commission considered the report of the DG in its ordinary meeting held on 22.03.2012 and vide its order of even date decided to forward copies thereof to the informant and the opposite parties to file their respective replies/objections thereto. The copies of the report were also forwarded to the office- bearers of the opposite party associations. KFCC 9. KFCC in its reply submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the informant did not attend the proceedings initiated by it. It is further submitted that it is because of the conduct of the informant in not clearing the dues payable to certain exhibitors that the other exhibitors were reluctant to enter into agreements with the sub-distributors and not due to any circular or directive issued by the opposite party associations. In the business circle, if a person/company fails to clear its dues or to abide by the contractual terms, other persons/companies will be wary of making any further dealings with such defaulting person/company. 14. In the present case also as the informant had not cleared dues to certain exhibitors, the other exhibitors were wary/reluctant to deal with it. However, the informant instead of resolving the dispute approached the Commission alleging anti-competitive activities only with an intention to wriggle out of the liability to clear the dues payable by it. The DG has failed to consider the conduct of the informant either during the investigation or while submitting his report. The DG has erred in coming to the conclusion that the opposite party associations have contravened the provisions of section 3(3)(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een conducted on the issues involved in the present case. The DG has neither appreciated the facts and circumstances of the present case nor has the DG appreciated the documents produced before it in proper perspective and hence the entire report of the DG is erroneous, preconceived and baseless. It has been pointed out that the DG has attributed the intention of pressurizing the informant just before the release of the film to the letter issued by KFCC without appreciating the circumstances in which the said letter was issued and also without appreciating the contents of the said letter. 19. In the investigation conducted by the DG, the informant has admitted that they neither attended the proceedings initiated as per the letter nor were they aware of the status of the proceedings before KFCC which itself goes to show that the intention behind the letter was only to resolve the dispute amicably and not to pressurize the informant. As an association, it is the duty of KFCC to act upon a complaint received by its member and the said duty cannot be termed as an anti-competitive activity. 20. The findings of the DG that KFCC has taken a decision not to deal with the film 'Mausam' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her person or enterprise or any other association. 23. Further, the byelaws of the association cannot be construed as agreement for the purpose of this section as byelaws are not agreements entered into by KFCC with any other person and these are the laws governing the inter se dealings of the members within the association and hence the same does not fall within the purview of section 3 of the Act. Thus, conclusion of the DG that byelaws are in violation of section 3 of the Act is erroneous, submits KFCC. 24. Furthermore, it has been submitted that in view of the observations of the DG in Case Nos. 25 of 2010, 41 of 2010, 47 of 2010 and 48 of 2010 that the KFCC is not engaged directly in any activity relating to the production, storage, supply, distribution, acquisition or control of articles or goods or the provision of services of any kind concerning the distribution/exhibition of films and hence does not constitute an enterprise or a group to fall within the purview of section 4 of the Act. Thus, in view of such observations, it was submitted that KFCC could not come within the purview of section 3 of the Act as it is not directly engaged in any activity relating to product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in violation of the provisions of section 3(3)(b) of the Act. 30. Lastly, it has been submitted that neither the information nor the DG report discloses the number of theatres in which the film was released or the number of shows it ran or the collections therefrom. Assailing the findings of the DG, it has been contended that other than the self-serving affidavit of the director of the informant, the DG has not made an effort to enquire into the relevant details and has blindly proceeded on the information given on behalf of the informant. In the result, KFCC has prayed that the present information may be rejected by the Commission. TTFDA 31. TTFDA in its reply dated 04.05.2012 stated that it filed its response before the DG vide its letter dated 03.12.2011. In the said response, it was pointed out that the membership and registration with the association is not compulsory for every film distributor to screen his film in the territory covered by it. It is, however, averred that almost all the film distributors of both Hindi and Telugu films are its members. Further, it has been stated that the association is not having any facility for registration of films of any language ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case and M/s PVR Pictures never mentioned name of APFCC in its letter nor did it complain of any contravention against APFCC. 37. Referring to the findings of the DG of contraventions against APFCC on the grounds that as per rule 52(a)(ii) of APFCC, the members are restricted to have business dealings relating to film production, distribution, exhibition, etc. with any person, who is not members of the association, it has been contended that the restriction on the members of APFCC to deal with non-members is not total. It has been argued that as per the said rule, such restrictions are not to apply any temporary dealings by a member with a non-member who is outside the jurisdiction of the chamber, irrespective of the nature of the dealing. 38. Coming to the findings of the DG of contraventions against APFCC on the grounds that and as per rule 4(ii)(j), the producers are prohibited to telecast film on satellite, TV or any other electronic media before a period of 3 years in case of big budget films and 2 years in case of low budget films, it has been urged that the purpose of the provision is to see that the distributors and exhibitors do not lose money in case of outright pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opposite party Nos. 1, 2 and 4 have contravened the provisions of section 3 of the Act? 42. The informant is the producer of the film 'Mausam' and had granted exclusive distribution rights of the said film in favour of M/s PVR Pictures Ltd. for the territory of Delhi, U.P., Nizam, Mysore, Tamil Nadu and Kerala. The film was due for theatrical release on September 16, 2011. However, it was informed by its distributor M/s PVR that the opposite party associations have issued circulars/directions to their members to interfere with release and exploitation of the informant's film 'Mausam' until recovery of the dues of Rs.2.5 crores of one of their member viz. M/s Suresh Productions Pvt. Ltd. 43. By way of background, it may be noted that in 2009, at the time of film 'Rann' directed by Shri Ramgopal Verma, Shri D. Suresh Babu had made a payment of Rs.3 crores in February 2009 to the producer of the film i.e. the opposite party No.5. However, due to some differences, in March, 2009, Shri D. Suresh Babu separated from the film 'Rann' and his amount of advance became due on the producer of film. On demand of payment, Shri D. Suresh Babu was told to wait till the performance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. which was a member of the opposite party associations, letters/circulars were issued by these associations to their respective members in order to put pressure on the informant producer just before the release of the film to ensure that the alleged outstanding payment to their member i.e. M/s Suresh Production Pvt. Ltd.is made by the informant. 48. In this connection, it would be useful to quote the relevant portions of the said letters/circulars issued by the opposite party Nos. 1, 2 and 4. 49. The opposite party No.1 association i.e. TTFDA issued a circular No.9/2011-12 dated 10.09.2011 to all the film distributors in Secunderabad requesting them not to release the film 'Mausam' in Nizam area. The last para of the circular is reproduced below: So we request all the Film Distributors in Secunderabad, do not release the Hindi Picture titled Mausam in Nizam area unless and until the dues of Rs.2.5 crores paid to M/s. Suresh Productions Ltd., Hyderabad by the producer Mr. Madhu Mantena. 50. The opposite party No.2 association i.e. KFCC issued a letter dated 09.09.2011 to M/s PVR Pictures Ltd., Bangalore and M/s Big Bang Media Ltd., Mumbai. The contents of the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en able to controvert the same by adducing material/evidence in their replies/objections. 54. In the result, it is held that the opposite party Nos. 1, 2 and 4 through their impugned actions, as noted above, have contravened the provisions of section 3(1) read with section 3(3) of the Act. 55. The DG in the report, apart from investigating the aforesaid conduct of the opposite party associations, also examined the rules and regulations/practices of the opposite party associations which put restrictions in the market. In this connection, it was noted by the DG that the investigations on similar issues involving film trade associations were conducted by the Office of the DG and the Commission had passed orders in such cases where the conduct and practices of the film associations were found to be in contravention of the provisions of the Act. It was further noted that the Commission in its order dated 16.02.2012 in Case Nos. 52 of 2010 and 56 of 2010, in addition to levying penalty on the opposite party associations therein, had also directed them to cease and desist from following the practices listed below and to take suitable measures to modify rules/regulations since they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing with non-members. 59. As per rule No.52(a)(ii) of the Rules of APFCC, no member shall have business dealings or transactions or contracts relating to film production, distribution, exhibition, studios and other infrastructural units of films in any language with any person/body within the jurisdiction of the Film Chamber unless such person/Body is a member of the Film Chamber. Further, by virtue of rule 52(b), a member, who directly or indirectly violates or contravenes the provision of rule No. 52(a)(ii) renders himself liable to disciplinary action, including fine, suspension and/or expulsion as may be determined by the Sub-Committee. 60. It appears that the aforesaid rule restrict the members of APFCC in dealing with non-members. Further, rule 4(ii)(j) provides that no producer shall sell or assign or otherwise deal with any T.V. channel holders either private or Government, Cable TV, Satellite TV, or any other electronic media to telecast their full length feature films or parts thereof, other than for publicity purposes of the film for a period of three years from the date of obtaining Censor Certificate in respect of high budget pictures, and two years in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be anti-competitive. In the said case, the Commission apart from issuing a cease and desist order, ordered modification of the said by-laws. A penalty of Rs. 16,82,204 was also imposed upon KFCC. In light of the said penalty, the Commission did not find it appropriate to impose penalty upon KFCC in a subsequent case i.e. Case No. 56 of 2010. Accordingly, the Commission is of the view that it is not necessary to impose any separate penalty upon KFCC in the present case as well. 65. Further, in Case No. 56 the Commission imposed a penalty of Rs. 1 lac on Telangana Telugu Films Distributors Association (TTFDA) for similar conduct. In the present case also, the acts and conduct of the opposite parties including TTFDA are similar in nature in so far as this association through its impugned letters/circulars tried to limit/control the supply of films, it is unnecessary to impose any penalty upon TTFDA in the present case as well. 66. In view of the above, a penalty is proposed to be imposed upon only the opposite party No. 4. Since, the opposite party No. 4 is an association and does not have a turnover of its own out of exploitation of the activities of film distribution and exhibit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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