Thursday, May 9, 2013

Distribution of channels and their pricing regulated by TRAI; making JV for such purpose isn’t anti-competitive

Where distribution of channels and their pricing by broadcasters/aggregators was totally regulated by TRAI Regulations and market share of joint venture (JV) formed by opposite parties (‘OPs’), i.e., channel owners, was only 10 per cent, conduct of OPs was not anti-competitive

In the instant case, informant-subscriber had filed information under Section 19 (1)(a) of the Competition Act, 2002 (“the Act”) against opposite parties (‘OPs’), i.e., Zee and Star channels, alleging that proposed JV of OPs in sale and distribution of channels would strengthen their position by adversely affecting competition in relevant market. According to informant, players in market would suffer due to undue advantage available to JV and consumer’s interest would suffer as consumers would be deprived of prices available in market and also would not be able to get competitive rates for channels subscribed to by them.

The Commission held as under:

1) Due to TRAI Regulations distribution of channels and their pricing by broadcasters/aggregators are totally regulated and, therefore, allegations that market power of JV would affect ability of Multi System Operators in bargaining were not substantiated ;

2) OPs could not be said to have violated section 3(3) of the Act in forming a JV. Since market share of JV formed by OPs was 10 per cent only and JV had not affected operations of other broadcasters or aggregators in any way, JV formed by OPs was not a dominant player in relevant market of services of aggregating and distribution of TV channels in case of Multi-system operators, Direct to Home Operators and Internet Protocol Television Operators in India and, therefore, there was no abuse of dominant position. Thus, opposite parties had not contravened provisions of sections 3(3) and 4 of the Act and proceedings in instant case were to be closed - Yogesh Ganeshlaji Somani v. Zee Turner Ltd. [2013] 33 taxmann.com 2 (CCI)

Support services provided by local authorities to business entity are liable to ST

Support services by way of off-street parking or other facilities provided by local authorities to any business entity would be liable to service tax

The local authorities operating off-street parking facilities were not subjected to VAT/service tax in Ireland whereas commercial operators engaged in that activity were liable to VAT/service tax. The Commission of European Communities brought a suit for declaration that said exemption to local authorities was violative of Council Directives.

European Court of Justice held as under:

1) Services provided by Government or local authorities were excluded from charge of service tax to extent specified in negative list under section 66D(a);

2) Such negative list entry, being an exception to charge, was to be strictly construed;

3) Exclusions from negative list provided in clauses (i) to (iv) of section 66D(a) have to be liberally construed, as they were intended to restore general principle of charge of service tax on all services;

4) Therefore, support services by way of off-street parking or other facilities provided by local authorities to any business entity would be liable to service tax - Commission of the European Communities v. Ireland [2013] 30 taxmann.com 234 (ECJ)