CCI penalises Kerala exhibitors body for denying films to Crown Theatre

NEW DELHI: The Kerala Film Exhibitors Federation (KFEF) has been found guilty by the Competition Commission of India (CCI) for not allowing the release of Malayalam and Tamil films in Crown Theatre.


A penalty of Rs 82,414 calculated at the rate of 10 per cent of its average income has been imposed on KFEF. Another penalty of Rs 56,397 and Rs 47,778 calculated at the rate of 10 per cent of their average income is imposed on KFEF president PV Basheer Ahmed and secretary MC Bobby respectively.


Crown Theatre had approached the Commission, which found KFEF, an association of theatre owners, to be conducting their activities in contravention of Section 3 of the Competition Act 2002. The theatre had alleged that KFEF was indulging in anti-competitive conduct in not allowing screening of Malayalam and Tamil films in its theatre since May 2013.


Noting that ‘utmost disregard’ was shown by KFEF and its office bearers to the past orders of the CCI against similar film associations, the Commission asked KFEF to cease and desist from indulging in anti-competitive conduct. It directed KFEF not to associate Ahmed and Bobby with its affairs, including administration, management and governance, in any manner for a period of two years.


KFEF was directed to organise, in letter and spirit, at least five competition awareness and compliance programmes over the next six months in Kerala for its members. The compliance of this will commence before expiry of 60 days from the receipt of the order.


The CCI order came consequent upon detailed investigation by CCI director general who found that the conduct of KFEF amounted to limiting and restricting the provision of films in the market. It was found that due to its differences with Crown Theatre, KFEF ensured that it did not receive Malayalam and Tamil movies for release in its theatre. Such denial due to the interference of KFEF was found to be in contravention of section 3(1) read with section 3(3)(b) of the Act.


CCI observed that distributors in the film industry denied Malayalam and Tamil films to the theatre due to the ban imposed by KFEF. They apprehended that non-observance of the directions of KFEF would result in their boycott as well by the members of KFEF.


Accordingly, CCI held that KFEF has indulged in anti-competitive conduct in violation of the provisions of section 3(3)(b) read with section 3(1) of the Act. Ahmed and Bobby were found to be in-charge of and responsible for the conduct of business of KFEF during the relevant period under section 48 of the Act.


While imposing penalty under section 27 of the Act, the Commission observed that the objective of penalty is to discipline the erring entities for their anti-competitive conduct as well as to create deterrence to prevent future contraventions.


CCI also took into account the rampant instances of anti-competitive conduct by associations in the film industry and past orders of the Commission where heavy financial penalties have been imposed. 


The Commission further noted that the conduct of KFEF and its above said office bearers was under investigation in a previous case and despite this fact, they resorted to anti-competitive activities.

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