SYMBIOSIS LAW SCHOOL, PUNE

COMPETITION LAW – I: INTERNAL I

TOPIC: Critically evaluate the concept and regulation of anti-competitive
agreements under the Indian Competition Law.

NAME: RITIKA CHAUHAN

PRN: 16010126460

SEMESTER: VII

DIVISION: E
 ABSTRACT

There are reasons to believe that developing economies tend to be more vulnerable to anti-
competitive practices than developed countries. The reasons include: high natural ‘entry barriers
due to inadequate business infrastructure, including distribution channels, and (sometimes)
intrusive regulatory regimes; asymmetries of information in both product and credit markets; and
a greater proportion of local (non-tradable) markets. Thus it may be particularly important to
protect, consumers in developing countries against cartels, monopoly abuses, and the creation of
new monopolies through mergers.

The author seeks to firstly analyze the concept and regulations pertaining to anti-competitive
agreements in India and how they have been interpreted over time by the Indian judiciary. The
author explores the rules of interpretation applied by the Indian Courts and the logic behind the
same. Further, the author brings to light a contemporary issue regarding the sharing of a revenue
model by multiplex operators such as PVR, INOX and others and how a complaint against them
entering into an anti-competitive agreement was dismissed by the CCI due to lack of evidence.
Towards the end, the author also puts forth certain suggestions on how the effectiveness and
efficiency of the competition law regulations can be enhanced in a dynamic environment.

INTRODUCTION

“A dynamic and competitive environment, underpinned by sound competition law and policy, is
an essential characteristic of a successful market economy”1

Several countries in the world have resorted to enacting competition laws to protect their free
market economies and to ensure an economic system in which the allocation of resources is

1
Khemani R. S., A Framework for the Design and Implementation of Competition Law and Policy, Preface (World
Bank Publications, 1999).
determined solely by supply and demand.2 The rationale of free market economy is that the
perfectly competitive market allow the buyers to make the best purchase.

The Hon‘ble Supreme Court has attempted to articulate the main purpose of competition laws in
our country vide their judgment in 2010 as follows,

“….―over all intention of competition law is to limit the role of market power that might result
from substantial concentration in a particular industry. Because of the control exerted by a
monopoly over price, there are economic efficiency losses to society and product quality and
diversity may also be affected. Thus, there is a need to protect competition. The primary purpose
of competition law is to remedy some of those situations where the activities of one firm or two
lead to the breakdown of the free market system, or, to prevent such a breakdown by laying down
rules by which rival businesses can compete with each other.”3

Development of Competition Law in Indian Context

In the Indian context, the implementation of competition law and policy has always been
considered an essential component of governance. Even the Arthashastra, the first known treatise
on government written by Chanakya in the 3rd century BC, in which political governance has been
equated with economic governance, had emphasized fair trade as one of the mainstay of good
governance.4

According to the Indian Constitution, freedom to trade or practice any occupation is a fundamental
right. As per Constitution, only the Parliament or the State has the power to impose restrictions on
this right. Constitution also provides for curbing concentration of economic power, so that the
common good is not adversely affected. Competition Law for India finds its base in Articles 38
and 39. These Articles are a part of the Directive Principles of State Policy. Article 38 of the

2
Srinivasan Parthasarathy, “Competition Law in India,” 28 (Kluwer Law International BV, The Netherlands, 3rd edn.,
2014)
3
Competition Commission of India vs. Steel Authority of India Ltd. and Anr. (2010) 10 SCC 744 Para 1-7
4
S.M Dugar, “Competition Law (Containing Commentary on Competition Act, MRTP Act & Consumer Protection
Act),” 760 (Lexis Nexis,5th edn., Volume 1, 2015).
Constitution of India mandate, inter alia, that the State shall strive to promote the welfare of the
people by securing and protecting as effectively, as it may, a social order in which justice social,
economic and political shall inform all the institutions of the national life, while Article 39 provides
that the State shall, in particular, direct its policy towards securing.

India enacted its first anti-competitive legislation in 1969, known as the Monopolies and
Restrictive Trade Practices Act (MRTP Act), it soon became an integral part of the economic life
of the country. Recognizing the important linkages between trade and economic growth, the
Government of India, in the early 90s took step to integrate the Indian economy with the global
economy.5 In the wake of liberalization and reforms introduced by GOI since 1991 with a view to
meet the challenges offered by globalization it was required to access the need to evolve India‘s
competition regime.6 After India became a party to the WTO agreement, a perceptible change was
noticed in India‘s foreign trade policy which had been earlier highly restrictive.7 Thus, finally
enhancing its thrust on globalization and opened up its economy removing controls and resorting
to liberalization. Finding the ambit of MRTP Act inadequate for fostering competition in the
market and eliminating anti-competitive practices in the national and international trade, the
Government of India decided to appoint a committee to propose a modern competition law.19

Acting on the high level committee report,, the Raghavan Committee Report with some
refinements, the Parliament passed it in December 2002 hence, the Competition Act, 200220 was
enacted which repealed the existing MRTP Act 1969 The basic objective is to provide a law
relating to competition among enterprises that will ensure that the process of competition left free
without stronger trading enterprises manipulating the market to their advantage and following from
that, to the disadvantage of consumers.

Scope of Indian Competition Law

5
Ibid.
6
Ibid.
7
Ibid.
The various provisions of the Act deal with the establishment, powers and functions as well as
discharge of adjudicatory functions by the Commission. Under the scheme of the Act, this
Commission is vested with inquisitorial, investigative, regulatory, and adjudicatory and to a
limited extent even advisory jurisdiction.8 In exercise of the powers vested in it under Section 64,
the Commission has framed Regulations called the Competition Commission of India (General)
Regulations, 2009 (for short, the ‗Regulations‘).9 The Act and the Regulations framed there under
clearly indicate the legislative intent of dealing with the matters related to contravention of the
Act, expeditiously and even in a time bound program.10 In the event of delay, the very purpose and
object of the Act is likely to be frustrated and the possibility of great damage to the open market
and resultantly, country's economy cannot be ruled out.

Primarily, there are three main elements which are intended to be controlled by implementation of
the provisions of the Act, which have been specifically dealt with under Sections 3, 4 and 6 read
with Sections 19 and 26 to 29 of the Act. They are

1) Anti- competitive agreements

2) Abuse of dominant position
3) Regulation of combinations,

which are likely to have an appreciable adverse effect on competition.

ANTI-COMPETITIVE AGREEMENTS

8
Anath Malathi, “The Competition Act–An Overview,” Nishith Desai Associates, The Chamber’s Journal, New Delhi
(March 2014).
9
Ibid.
10
Ibid.
 Meaning and Concept

“People of the same trade seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”11

This statement of Adam Smith makes it abundantly clear for a need to have a proper regulatory
mechanism for prevention of anti-competitive agreement which not only affect the market
economy leading to monopolistic approach but also victimizes the consumers and thereby cause
harm to the entire economy creating hindrance to the competition in the market.12

Anticompetitive agreements can be said to be agreements that negatively or adversely impact the
process of competition in the market.13 According to an OECD/World Bank Glossary,
anticompetitive practices refer to a wide range of business practices that a firm or group of firms
may engage in order to restrict inter-firm competition to maintain or increase their relative market
position and profits without necessarily providing foods and services at a lower cost or higher
quality.14 Similarly, it can be said that anticompetitive agreements are agreements between firms
or enterprises that restrict or prevent or otherwise unfavourably affect competition, and that may
help increase the market position or share of the parties and may also be to the disadvantage of the
consumer as the products and services may be available at a higher cost than are available in a
competitive market and also may be of a lower quality.15

11
Oxford Essential Quotations (5 ed.), Edited by Susan Ratcliffe .Publisher: Oxford University Press Published online:
2017.
12
Pratima Singh Parihar, “Anti-Competitive Agreements- Underlying Concepts & Principles Under the Competition
Act, 2002,” 28 (Competition Commission of India, LL.M. dissertation, National Law Institute University, Bhopal
(M.P., 2012).
13
Amitabh Kumar, “Anti-Competitive Agreements,” (Presentation, IIPA, Nov 2006).
14
Augustine Petter, “Anti-competitive agreements including cartels,” (Presentation at India International Centre, Nov
2008).
15
Augustine Petter, “Anti-competitive agreements including cartels,” (Presentation at India International Centre, Nov
2008).
The term appreciable adverse effect has not been defined in the Act, but section 19(3) of the Act
provides for certain factors to be given due regard by the commission while determining whether
an agreement have AAEC or not16, namely:—

a) creation of barriers to new entrants in the market;

b) driving existing competitors out of the market;
c) foreclosure of competition by hindering entry into the market;
d) accrual of benefits to consumers;
e) improvements in production or distribution of goods or provision of services;
f) promotion of technical, scientific and economic development by means of production or
distribution of goods or provision of services

Thus in assessing whether an agreements have appreciable adverse effect on competition, both the
harmful and beneficial effects shall be taken into consideration while determining any case under
section 3 by the commission.17 Barriers to new entrants can be created, for example, though an
agreement to set unduly high standards. Driving existing competitors out of the market will happen
for example if an enterprise enters into an exclusive supply agreement with distributers that oblige
them to discontinue their trade with other suppliers, or if certain supplier enters into agreement to
sharply reduce the price with a view to drive out competitors who are not party to the agreement .
Competition may be foreclosed if an enterprise enters into a long term agreement with a raw
material or components suppliers, there by adversely affecting supplies to competitors. Accrual of
benefits to consumers can arise from lower prices or improved quality or more efficient delivery
of services. Improvements in production or distribution of goods or provision of services are found
for example when there is rapid after-sale service or when a large range of products being stocked
by distributors. Promotion of technical, scientific and economic development may arise from
agreements relating to research and development or specialization in production.

Anti-Competitve agreements under Competition Law, 2002

16
Nishith Desai, “Competition Law in India: A Report on Jurisprudential Trends,” (New Delhi, June 2015).
17
Ibid.
The present Act is quite contemporary to the laws presently in force in the United States of
America as well as in the United Kingdom. 18

The Act as laid down in its preamble has been framed on the philosophy of modern competition
law to come in line with current policies of GOI with growing national and international trends
with regard to competition both at national and international level. It aims at fostering competition
and promoting Indian markets against anti-competitive practices by enterprises. Competition laws
in India like in any other jurisdiction prohibits all agreements which restrict freedom of trade and
cause consumer harm by way of limiting production and distribution of goods and services and
fixing prices higher than normal.19 For example, a cartel of producers, traders, together may fix
prices higher than normal leading to loss in consumer welfare.20

Principle objective of supplier of goods and services who are in a position to manipulate the market
is to maintain their profits at pre-determined levels. They seek to achieve through this various
means.21 Agreements for price-fixing, limiting supply of goods or services, dividing the market,
etc. are the usual modes of interfering with the process of competition and ultimately reducing or
eliminating competition22. Where competition is adversely affected to an appreciable extent, such
agreements would be anti-competitive.

The law prohibiting agreements, practices, and decisions that are anti-competitive are contained
in section 3 of the Act. The term anti-competitive agreements as such has not been defined by the
Act, however, Section 3 prescribes certain practices which will be anti-competitive and the Act
has also provided a wide definition of agreement under section 2 (b).

Section 3(1) is a general prohibition of an agreement relating to the production, supply,

distribution, storage, acquisition or control of goods or provision of services by enterprises, which
causes or is likely to cause an AAEC within India. Section 3(2) simply declares agreements under
section 3(1) void.

18
Vijay Kumar Singh, “Competition Law and Policy in India: The Journey In A Decade,” 4 NUJS L. Rev. (2011).
19
Ibid.
20
Ibid.
21
G. R. Bhatia, Abdullah Hussain & Ravisekhar Nair, “Law in Focus: Competition Law in India,” 1 IJIEL (2008).
22
Ibid.
Section 3(3) deals with certain specific anti competitive agreements, practices and decisions of
those supplying identical or similar goods or services, acting in concert for example agreement
between manufacturer and manufacturer or supplier and supplier, and also includes such action by
cartels. Section 3(4) deal with restraints imposed through agreements among enterprises in
different stages of production or supply etc. for example agreement amongst manufacturer and
supplier.

Section 3 (5) provides for exceptions, it saves the rights of proprietor of any intellectual property
right listed in it to restrain the infringement of any of those rights regardless of section 3.

Rules of Interpretation for Anti-Competitive Agreements

After taking all the relevant factors into account in a given statute, there should be still some
principles on which one can arrive at a conclusion on the effect of the anti-competitive conduct or
practice on competition. The courts all over the world including India have come to judge
violations of anti-competitive agreements by the following three main approaches namely:

1. The Rule of Reason

The Rule of Reason is a legal approach where an attempt is made to evaluate the pro-
competition features of the restrictive business practice against its anti-competitive effect in
order to decide whether or not the practice should be prohibited.23 This approach weighs the
reasons of a certain action taken and the economic benefits and costs of that action before
coming to a judgment. Under the rule of reason, the effect on competition is found on the facts

23
Chaitra Yadwad, “Antitrust Cases - Rule Of Reason and Per Se Illegal,” 1(2) IJLI (2016).
 of a particular case, and its effect on the market condition, and existing competition including
the actual or probable limiting of competition in the relevant market.24

Supreme Court, in Tata Engineering and locomotive co. Ltd. V. Registrar25 of restrictive trade
agreements observed that to determine whether the restrain promoted or suppressed
competition, it was necessary to consider three matters: first, what facts are peculiar to the
business to which the restraint is applied. Second, what was the condition before and after the
restraint was imposed. Third, what is the nature of restraint and what is its actual and probable
effect. Agreements under section 3(4) are subjected to test of this rule of reason.

Hon’ble Supreme Court of India observed that the rule normally requires an ascertainment of
the facts or features peculiar to the particular business; its condition before and after the
restraint was imposed; the nature of the restraint and its effect, actual or probable; the history
of the restraint and the evil believed to exist, the reason for adopting the particular restraint and
the purpose or end sought to be attained and its only on a consideration of these factors that it
can be decided whether a particular act, contract or agreement, imposing the restraint is unduly
restrictive of competition so as to constitute restraint of trade.26

2. The Per se Rule

Per se‘ is a Latin phrase meaning ―in itself ―in legal terms it basically means that the courts
will regard a certain action to always be harmful and therefore it must only be proved that the
defendant has committed the action to find him guilty.27

The Per se rule and its rationale has been explained by US courts in a number of cases. Like in
Northern Pacific Railway Company v. United States28 the Court observed that there are certain
agreements and practices which because of their pernicious effects on competition and lack of

24
Ibid.
25
Tata Engineering and locomotive co. Ltd. V. Registrar [1977 AIR 973].
26
Ibid.
27
Supra 26.
28
Northern Pacific Railway Company v. United States [356 U.S. 1 (1958)].
 any redeeming virtue are confusedly presumed to be unreasonable and therefore illegal without
any elaborate inquiry as to the precise harm they have caused or the business excuse for their
use. This principle of per se avoids the necessity for an incredibly complicated and prolonged
investigation into the entire history of industry involved, as well as related industry, in an effort
to determine at large whether a particular restraint has been unreasonable, an inquiry so often
wholly fruitless when undertaken. 29

The per se rule, as opposed to the rule of reason has been applied by the Courts all over the
world in respect of particularly harmful agreements such as agreements relating to price-fixing,
allocation of territories, bid-rigging, group boycotts, consulted refusal to deal and resale price
maintenance

In India there is no concept of per se rule under completion law as such.30 However, Evidence
Act, 1872 under section 4 clause 3 provides for ―conclusive proof which gives an artificial
probative effect by law to certain facts. No evidence is allowed to be produced with a view to
combating that effect. 31

3. The Rule of Presumption

Since the Act in section 3(3) used the term ―shall be presumed so it becomes important to
elaborate this principle of interpretation as well while discussing anti-competitive agreements.
The principle have been provided in the Evidence Act, 1872 under section 4 clause 2 which
says: ―whenever it is directed by this Act that the Court shall presume a fact, it shall regard
such fact as proved, unless and until it is disproved.”32

The principle of ‗shall presume‟, used in section 3(3), has been explained by Courts in India
in numerous cases. Supreme Court in Sodhi Transport co v. State of Utter Pradesh33 observed

29
Supra 26.
30
Gunda Veda Sree, “Anti-Competitive Agreements: Concepts Under Competition Act 2002,” 2(1) IJAR (2015).
31
Ibid.
32
Sarbpriya Ray & Ishita Aditya Ray, “Emergence and Applicability of Competition Act, 2002 in India’s New
Competition Regime: An Overview,” 1 JLPG (2011).
33
Sodhi Transport co v. State of Utter Pradesh [1986 AIR 1099].
 that the words ‘shall presume’ have been used in Indian judicial lore for over a century
to convey that they lay down a rebuttable presumption in respect of matters with reference to
which they are used and not laying down a rule of conclusive proof. The Court also observed
that a presumption is not in itself evidence but only makes a prima facie case for the party in
whose favor it exists.34 It indicates the person on whom the burden of proof lies. But when the
presumption is conclusive, it obviates the production of any other evidence. But when it is
rebuttable, it only points out the party on which lies the duty of going forward on the evidence
on the fact presumed, and when that party has produced evidence fairly and reasonably tending
to show that the real fact is not as presumed, the purpose of presumption is over. 35

Therefore it can be drawn from the above discussion that in case of agreements listed in section
3(3), once it is established that such an agreement exist , it will be presumed that the agreement
has an AAEC and then the burden of proof will come on to the alleged defendant.

Hence the presumption as provided under section 3(3) can be rebutted by the party concerned
in particular case.

Kinds of Anti-competitive Agreements

Competition laws in all over the world usually places anti-competitive agreements in two
categories namely – horizontal agreements and vertical agreements. The former, namely the
horizontal agreements are those among competitors and the latter, namely the vertical agreements
are those relating to an actual or potential relationship of purchasing or selling to each other. A
particularly pernicious type of horizontal agreements is the cartel. Vertical agreements are
pernicious, if they are between firms in a position of dominance. Most competition laws view
vertical agreements generally more leniently than horizontal agreements, as, prima facie,
horizontal agreements are more likely to reduce competition than agreements between firms in a
purchaser seller relationship.36

The Act has not used the term horizontal agreements and vertical agreements, however the
language used in the Act suggests that agreements referred to in section 3(3) and section 3 (4) are

34
Ibid.
35
Supra 35.
36
Dr. Navdeep Kumar, “Competition Policy for Free and Fair Competition-Rationale and Implications,” 1(5) GRA
(2012).
horizontal and vertical agreements respectively. It is to be noted that section 3(3) and section 3(4)
are the main provisions which are mainly attracted to prove the existence of any anti-competitive
agreements.

Horizontal Agreements

A careful reading of section 3(3) prompts that it restricts three things namely agreement, practice
and decision including cartels who are identical or similar trade of goods or provision of services.
Agreements prohibited under section 3(3) are described as horizontal agreements for they apply to
similar or identical trade of goods or provision of services.

It is to be noted that under section 3(3) agreements, decisions and practices between similar trade
of goods and provision of services is a condition precedent for prohibition. For the violation of
Section 3(3) (b), it must be established that there exists an agreement, practice carried on or,
decision taken by entities mentioned therein, including cartels, engaged in identical or similar trade
of goods or provisions of services, which result in effects mentioned in clauses (a) to (d) of sub-
section (3) of Section 3 of the Act. These include acts that limit or control production, supply,
markets, technical development, investment or provision of services.

Section 3(3) of the Act expressly mentions four types of horizontal agreements that are presumed
to have an AAEC as mentioned above37:

1) Price Fixing agreements: Agreements that directly or indirectly determine purchase or sale
price
2) Agreements that limit or control production, supply, markets, technical development
investment or provision of services
3) Market sharing or Market division agreements: Agreements that share the market or source
of production or provision of services by way of allocation of geographical area of market,
or type of good or services or the number of customers in the market or any other similar
way

37
B. S. Chauhan, “Indian Competition Law: Global Context,” 54(3) JILI (2012).
 4) Direct or indirect bid rigging or collusive bidding agreements

Vertical Agreements

Vertical Agreements are agreements between persons at different levels of the production chain
such as an agreement between a manufacturer and a distributor.38 Section 3(4) deals with certain
specific vertical agreements.

Three key potential anticompetitive effects of vertical restraints which can occur at the upstream
level, the downstream level or both:

- foreclosure and rising rivals’ cost;

- dampening competition between players in the market;
- facilitating collusion between players in the market.89

Vertical restrains can facilitate collusion among competitors by helping competitors to overcome
obstacle they otherwise would face in attempting to maintain price above competitive levels and
they can raise competitors’ cost.39 By foreclosing or disadvantaging competing firms, vertical
restraints create barriers to entry or expansions so that rivals can no longer discipline the offending
firm‘s price increase; so one leads to collusion and the other to exclusion. 40

Following are the specific kinds of vertical agreements that are prohibited under Section 3(4)41:

1) Tie-in arrangements: Agreements including any agreement requiring a purchaser of goods

(called tying product), as a condition of such purchase, to purchase some other goods
(called tied product).
2) Exclusive supply agreements: Agreements restricting in any manner, the purchase from
acquiring or otherwise dealing in any good other than those of the seller or any other
person‖99. A case in point is where the buyer asked the manufacturer not to manufacture
identical goods for any other buyer without his consent

38
Supra 39.
39
Ashkan Naghdi & Ali Gharibeh, “An Overview of AntiCompetitive Conditions in America,” 9(2) JPL (2016).
40
Ibid.
41
Ibid.
 3) Exclusive distribution agreement: Any agreement or limit, restrict or otherwise withhold
the output or supply of any goods or allocate any area or market for the disposal or sale of
goods may fall within the category of exclusive distribution agreements.
4) Refusal to deal: Agreements which restrict, or are likely to restrict, by any method the
persons or classes of persons or whom goods are sold or from whom goods are bought.

General Exception to Anti-Competitive agreements

1) Intellectual Property Rights

Section 3(5)(i) provides, exemption from the application of section 3, to the right of any
person to restrain any infringement of, or to impose reasonable conditions, as may be
necessary for protecting any of his rights which have been or may be conferred upon him
under42–
a. The Copyright Act, 1957 (14 of 1957);
b. The Patents Act, 1970 (39 of 1970);
c. The Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade Marks Act,
1999 (47 of 1999);
d. The Geographical Indications of Goods (Registration and Protection)Act, 1999(48
of 1999),
e. The Designs Act, 2000 (16 of 2000);
f. The Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000).

Hence, like competition laws in other countries the Act recognizes the value of IPRs an an
incentive to creativity and economic growth. However, for exemption under section 3(5)
restriction must be reasonable and necessary to protect IPR.43

42
Supra 35.
43
Ibid.
 2) Exports

Section 3(5) (ii) exempts the right of any person to export goods from India up to the extent
to which the agreement relates exclusively to the production, supply, distribution or control
of goods or provision of services for such export.44

Many countries exempt anti-competitive agreements relating to exports from the operation
of law; this is presumably on the ground that such anti-competitive agreements harm only
overseas consumers and are therefore of no concern to the national authorities.45

3) Exemption for Joint Ventures

Section 3(3) exempts any agreement entered into by way of joint ventures if such
agreement increases efficiency in production, supply, distribution, storage, acquisition or
control of goods or provision of services. The term joint venture has not been defined in
the Act. In general terms it means the cooperation of two or more individuals or businesses
in which each agrees to share profit, loss and control in a specific enterprise. 46

ISSUES RAISED

1. Based on the abovementioned content, whether multiplex chains in India like PVR, INOX
and others can be accused of entering into anti-competitive agreements if they have agreed
to a revenue sharing model?

44
Ibid.
45
Supra 26.
46
Ibid.
 ANALYSIS

Unilazer Ventures Pvt Ltd through its division RSVP, an independent film content creation
company, in a complaint had charged the FICCI Multiplex Association and four multiplex chains,
including PVR Ltd and Inox, of collusion to enforce a revenue share model on producers and
distributors and levying a fee beyond the agreed period.47

The complainant stated that the Virtual Print Fee (VPF) is paid by the film producer/distributor to
single screen theatres and multiplexes for purchasing digital cinema projection equipment for
screening of the film.48

RSVP alleged that the VPF model was agreed upon by the producers/ distributors with a sunset
period, in a move to reduce the cost of physical prints incurred by them to curb piracy and improve
quality of cinema viewing experience.49 However, despite the agreed period being long over,
multiplexes have continued to charge the VPF even after the sunset period, it alleged. Besides,
four entities do not negotiate on VPF individually, but do so collectively, owing to anti-competitive
agreement amongst them.50

The complainant further alleged that the four multiplexes under the aegis of FICCI Multiplex
Association have been colluding among themselves to put forth a revenue sharing agreement that
is non-negotiable, among others.51 By doing so the entities violated Section 3 of the Competition
Act which pertains to anti-competitive agreements, the complainant alleged.

The CCI, however, dismissed the complaint due to lack of evidence to prove collusion among the
multiplex chains and said the practice originated from Hollywood and was adopted in Indian
cinema as well without any formal or written agreement. “Since there is no written agreement, as
a corollary, the question of formal arrangement of ‘sunset-clause’ does not exist”.

47
Financial Express, “Competition watchdog dismisses complaint aginst PVR, Inox, 3 others”, By Usman Shaikh.
https://www.financialexpress.com/industry/competition-watchdog-dismisses-complaint-against-pvr-inox-3-
others/1655284/ Updated: July 24, 2019 9:04:03 PM
48
Ibid.
49
The Hindu, ‘Competition watchdog verdict puts producers on the spot’. By Udhav Naig at
https://www.thehindu.com/news/cities/chennai/competition-watchdog-verdict-puts-producers-on-the-
spot/article28726749.ece. Updated: July 27, 2019 01:04 IST
50
Ibid.
51
Ibid.
While as far as the anti-competitive collusion is concerned, CCI said, “no indication of any such
agreement or arrangement or understanding between the OPs (five entities) has been placed on
record.” The fair trade regulator noted that there is no evidence to indicate that four multiplexes
met under the aegis of FICCI Mutliplex Association or used its platform to arrive at a common
VPF to be charged from producers.52

CONCLUSION

In the abovementioned issue, while this complaint has been dismissed primarily due to lack of
evidence, it does not change the fact that the multiplex owners obtain large sums as cash advances
from e-commerce companies involved in cinema bookings. However, this amount is not passed
on to the content creators. There is significant delay in paying content creator companies. In order
to prevent a cartelization involving thousands of crores, the CCI could have at least called for an
investigation into the matter.

Successful implementation of any Competition regime has two distinct limbs; enforcement of
competition laws and advocacy of benefits of competition among various stakeholders. Experience
suggests that, in the process of transition from planned economy to a more open economy, the
application of competition law can usefully support other policy initiatives. Trade policy, industrial
policy, privatization, deregulation, regional policy and social policy all need to be conducted in a
manner attuned to the market mechanism for an economy to function as efficiently as possible. A
carefully and skilfully designed competition regime in an environment of competition culture acts
as a catalyst for trade liberalization, foreign direct investment, and other economic policies which
have the like objectives of promoting sustainable development, growth and welfare of the common
man.

In order to make any competition regime successful, therefore, apart from enforcement of
competition laws, vigorous advocacy of benefits of competition is also required. Towards this end,
a broad based consultation with those associated with trade policy, industrial policy, privatization,

52
Ibid.
deregulation, regional policy and social policy is needed to make all these policies compatible with
competition. These policies need to be conducted in a complementary manner and it is important
that a mechanism exists for incorporating the ―competition dimension‖ within all such
government decisions and policies.

Keeping in view the nature of the controversies arising under the provisions of the Act and larger
public interests, the matters under it should be dealt without any undue delay. In the event of delay,
the very purpose and object of the Act is likely to be frustrated which may result in great damage
to the open market and thereby to country's economy.

REFERENCES

ACTS

1. The Constitution of India, 1950.

2. The Monopolies and Restrictive Trade Practices Act, 1969.
3. The Competition Act, 2002.
4. The Indian Evidence Act, 1872.

BOOKS

1. Dugar S.M., Guide to Competition Law: MRTP Law, Competition Law and Consumer
Law, Volume 2, Lexis Nexis (5th ed. 2010).
2. Khemani R. S., A Framework for the Design and Implementation of Competition Law and
Policy, World Bank Publications (1999).
3. Parthasarathy Srinivasan, Competition Law in India, Kluwer Law International,
Netherland (3rd ed. 2014)

ARTICLES AND JOURNALS

1. Aman Srivastava, “Anti-Competitive Agreements under Competition Act,” 2(5), IMJ
(2015).
2. Ashkan Naghdi & Ali Gharibeh, “An Overview of AntiCompetitive Conditions in
America,” 9(2) JPL (2016).
3. B. S. Chauhan, “Indian Competition Law: Global Context,” 54(3) JILI (2012).
4. Dr. Navdeep Kumar, “Competition Policy for Free and Fair Competition-Rationale and
Implications,” 1(5) GRA (2012).
5. Gunda Veda Sree, “Anti-Competitive Agreements: Concepts Under Competition Act
2002,” 2(1) IJAR (2015).
6. Sarbpriya Ray & Ishita Aditya Ray, “Emergence and Applicability of Competition Act,
2002 in India’s New Competition Regime: An Overview,” 1 JLPG (2011).
7. Vijay Kumar Singh, “Competition Law and Policy in India: The Journey In A Decade,” 4
NUJS L. Rev. (2011).

NEWS ARTICLES

1. Financial Express, “Competition watchdog dismisses complaint aginst PVR, Inox, 3

others”, By Usman Shaikh.
2. The Hindu, ‘Competition watchdog verdict puts producers on the spot’. By Udhav Naig.