9911796707
TMI Blog2023 (8) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (in short 'Act'), against PVR Limited (in short 'PVR') and INOX Leisure Limited (in short 'Inox') for the alleged contravention of the provisions of Section 3(1) of the Act, has been dismissed. 2. In brief, the Informant is stated to be a global, independent, nonprofit, public policy research, advocacy and capacity building organisation. PVR is stated to be a public listed company engaged in the business of exhibition, distribution and production of movies and also earns revenue from in-house advertisement, sale of food and beverages and Inox is stated to be a public listed company engaged in the business of operating and managing multiplexes and cinema theatres in India. 3. According to the Informant, both PVR and Inox have entered into an anti-competitive agreement which is likely to cause an appreciable adverse effect on competition (AAEC) in the relevant market for the exhibition of films in multiplex theatres and high-end single screen theatres in different cities in India. At the time, when the information was filed by the Informant, the Informant had the information that both PVR and Inox are going to be merged as a combined entity and is going to be called 'PVR INOX Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PVR Inox be directed to suitably amend the proposed agreement so as not to cause an AAEC in India and ensure that the combined entity does not abuse its dominant position. 7. The Commission observed that the Informant has filed the information on apprehension on account of the proposed merger and that it will be dominant in terms of Section 4 of the Act on account of being owner of 1646 multiplex screens out of 3200 multiplex screens approximately in India. The Commission has observed that even for attracting Section 3(1) of the Act there has to be an agreement between two or more parties and the agreement should be of the nature which may result in an AAEC or a likelihood thereof but no case was found to be made out merely on an apprehension that the agreement may give rise to a conduct in the future which would thereafter cause AAEC in the market. It also noticed that the Informant has not specifically alleged contravention of Section 4 of the Act rather the information contains averments that after PVR and Inox become a single entity then it would be dominant entity in future. It was observed that not only entity has not come into being because at by that time the merger was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain their separate identities despite the agreement to coordinate and even after the agreement is performed whereas in the agreement between the parties which has been sanctioned as a scheme by the Tribunal is a combination which means the original two parties would loose their separate identity and one composite entity is to emerge as a result of the transaction then it is governed by Section 6 of the Act. It is further submitted that even there is a different criteria for evaluation for an application for contravention of Section 3 and 6 of the Act because Section 19(3) of the Act lays down the criteria for violation of Section 3, whereas Section 20(4) lays down the same for Section 6 of the Act. It is also submitted that there are different inquiry procedure provided in the Act as for the purpose of examining violations of Section 3, the procedure in Section 26 which is initiated either by a complaint from a third party, government body or suo motu by the CCI, but does not impose any positive obligation on the parties to the agreement to give prior intimation to the Commission in any manner and the matter is thereafter investigated by the DG. On the other hand, the procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive agreements whereas Section 5 of the Act talks of combination which says that "the acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises" 15. There is no dispute to the fact that the scheme to amalgamate and consolidate any business of Inox with PVR has been sanctioned by the order dated 12.01.2023 by the Tribunal with the specific orders that "the scheme of merger by absorption is hereby sanctioned, and the appointed date of the scheme is fixed mutually as 1st January, 2023". 16. It is apparent that both PVR and Inox have now become a single entity after merger and the effect of a combination as defined under Section 5 of the Act which is regulated by Section 6 of the Act has nothing to do with Section 3(1) of the Act which deals with the anti-competitive agreements in which both the entities retain their separate identities even after the agreement is entered into unlike the merger of two entities which takes effect of a combination in terms of Section 5 of the Act. It has come in the order itself that since the merger of PVR and Inox was not falling within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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