Tuesday, November 6, 2012

‘Son of Sardar’ losses against ‘Jab tak hai Jaan’; recital between single screen theatre owners and YRF held valid

The Ajay Devgn Films (“ADF”) alleged that Yash Raj Films (“YRF”) while distributing the rights to exhibit ‘Ek Tha Tiger’ put a condition on single screen theater owners that they would have to simultaneously exhibit the other film ‘Jab Tak Hai Jaan’ to be released on the eve of Diwali. The ADF further alleged that, since there was a threat that the YRF would not allow to exhibit the movie ‘Ek Tha Tiger’ if the contract to exhibit ‘Jab Tak Hai Jaan’ was not entered simultaneously, it amounted to abuse of dominance and violation of section 3 and 4 of Competition Act. ADF argued that the agreement between theater owners and YRF was a tie-in arrangement.
The grievance of the ADF arose because of its fear that it would not get enough theaters for the movie ‘Son of Sardar’ releasing on the same date as of ‘Jab Tak Hai Jaan’

The Commission held in favour of YRF as under:

a) The impugned agreement would not be affecting the competition in the Indian market as such or would not create any barriers for new entrants or drive existing competitors out of the market;

b) The single screen theater owners took competitive business decision in their interest to screen two films of YRF. Such agreement was purely commercial in nature between parties promoting their economic interests;

c) Since single screen theater owners had liberty either to agree or not to agree, the agreement could not be said to be a restraint on the freedom of business of theater owners;

d) The release of any other film including ‘Son of Sardar’ could be postponed or preponed as per availability of the screens;

e) The market could not be restricted to any particular festival period like Eid or Diwali and the market had to be considered a market available throughout the year;

f) Further, the ADF didn’t present any evidence to prove the dominant position of the YRF in the film industry. In the absence of evidence of its market share, economic strength, etc. it could not be construed that YRF had dominance in the market just because it had produced various blockbuster movies in past and it had big name in the industry.

In view of above, the Commission was prima facie of the opinion that there was no contravention of the provision of the Act – AJAY DEVGN FILMS V. YASH RAJ FILMS PRIVATE LIMITED [2012] 26 taxmann.com 350

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