CCI dismisses complaint against producers of Padmaavat and Padman alleging collusion over sharing the market by changing the release date of the two films [READ ORDER]

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The Competition Commission of India vide its order dated June 1, 2018 dismissed a complaint filed by Kshitiz Arya and Shri Purushottam Anand against makers of the films Padmaavat and Padman. The information was filed against Viacom18 Media Pvt. Ltd,  Bhansali Productions, Ms Twinkle Khanna, Kriarj Entertainment Private Limited, Side Films India Limited, Cape of Good Films Private Limited and Hope Productions Private Limited alleging violation of the provision of Section 3(3) of the Competition Act. Read order here.

Background:

The grievance of the Informants was that the makers of the two movies i.e. ‘Padman’ and ‘Padmavat’ colluded to share the market by scheduling different dates/ time frames for release of their respective movies resulting in controlling the supply of movies in the market thereby contravening the provisions of Section 3(3) of the Competition Act.

  • According to the Informants, sharing and allocation of time-period for film release between different filmmakers is a collusion that falls within the ambit of clause (c) of Section 3(3) which covers agreements by which persons or enterprises agree to share the market by way of allocation of geographical area of the market, or type of goods or services, or number of customers in the market or any other similar way. The Informants interpreted the expression ‘or any other similar way’ of Section 3(3)(c) to include various modus operandi depending on the nature, practices and other peculiarities of the market so long as it results in sharing of the market. According to the Informants, allocation of market by allocating the window of time to release the film is covered in ‘any other similar way’ as it has resulted in sharing of market in a manner and effect which is similar to the sharing of the market by allocating geographical area, type of services or number of customers.
  • They alleged that changing the release date of movies in this manner controls the supply of this service, and thereby limiting the options available to the customers and the aforementioned two films did not compete on the parameters such as quality of movie/ direction etc.
  • The Informants also alleged that the producers of the aforesaid two films have also contravened Section 3(3)(b) of the Act by controlling the supply of films. If more films are released on the same day, only the best/ most entertaining film would be able to generate revenue.

The movie ‘Padmavat’ was first scheduled to be released on December 1, 2017. However, prior to its release the movie was entangled in certain controversies leading to legal proceedings thereby a delay in obtaining censor certificate from the Central Board of Film Certificate (CBFC). Further, various social groups and religious organisation had declared that they would agitate against the movie if it gets released and had also threatened to indulge in violence against the cinema halls screening the said movie. Meanwhile, in the month of November, the producers of ‘Padmavat’ had voluntarily decided to defer the release of the movie scheduled for December as protests pertaining to the historical accuracy of the movie ‘Padmavat’ continued across the country. Thereafter, CBFC set up a special panel to watch the movie on December 28, 2017. After the special panel pre-viewed the movie, CBFC had recommended for five modifications in the movie which were accepted and implemented by the makers of movie ‘Padmavat’. Finally, the uncertainty over the release of the movie came to an end when CBFC issued the censor board certificate to the said movie. Owing to these events, the release date of Padmaavat was shifted to January 25, 2018.

The Informants submitted that the movie Padman was initially supposed to release on January 25, 2018. The Informants stated that through a joint press conference held on January 19, 2018, Shri Sanjay Leela Bhansali, producer of ‘Padmavat’ and Akshay Kumar, an actor and a part of the cast of the film ‘Padman’, announced that the makers of movie ‘Padman’ have decided to postpone the release date of their movie ‘Padman’ from January 25, 2018 to Feb 09, 2018 at the request of Shri Sanjay Leela Bhansali to avoid any loss of profits on account of competition between these two films. According to the Informants, the press release was indicative of the fact that the opposite parties had entered into a collusive agreement to adjust the release date/ time with a view to avoid competition. The Informants submitted that release of movies is strategically planned months ahead of the actual release dates. Therefore, producers of Bollywood movies try to avoid clash at the box office.

Observations of the Commission:

  • The delay of releasing a movie ‘Padmavat’ was caused due to the protest and regulatory impediments and not based on any collusion with any party.
  • Releasing of a movie is a strategic and tactical business decision taken by the producers. The makers of a film have to consider a lot of factors before releasing the movies for distribution such as market targeting, branding of the movie, distribution expenditure, revenue sharing with the distributors and competition with other movies, among others. A major concern for the producer of a movie is to get the maximum number of screens for release of a movie as the same is directly proportional to the potential revenue generated by the movie. Further, owing to piracy issues in the film industry, movie production houses releasing mega budget movies adopt a business strategy of simultaneously releasing their new movies in a large number of screens in order to realise maximum revenue during the first week of their release. Thus, the strategy of production houses releasing mega budgeted movie in not competing with another big budget movie does not seem to be unfair as both the movies cannot be released simultaneously in maximum number of screens. It is further observed that the rationale behind mega budget movies not competing with other movies is that the producers would have lesser risk and would be able to earn better profit/ return on investment. Therefore, such decision, which is a result of market outcome, appears to be a legitimate business decision rather than an anti-competitive practice.

Decision:

In view of the above observations, CCI ruled that the anti-competitive conduct alleged against the makers of Padman and Padmavat does not get established. Further, the evidence supplied in the information did not seem to indicate any concerted action while deciding the dates for the release of the movies and accordingly, did not raise any competition concerns. No case of contravention of the provisions of the Act was found to be made out against the opposite parties and the matter has been ordered to be closed in terms of the provisions of Section 26(2) of the Act.

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