By Nihit Nagpal and Anuj Jhawar
On June 16th, 2022, in Re: Vijay Gopal v. Big tree Entertainment Pvt Ltd1 , the Competition Commission of India (CCI) issued an investigation under Section 26(1) of the Competition Act, 2002, against BookMyShow, as a result of alleged unfair practices and directed the Director General (DG) to provide a report within 60 days, examining whether the Opposition Party no.1. i.e. Big Tree Entertainment Pvt. Ltd. has been conducting practice that is in contravention of Section 4 of the Competition Act, 2002.
Re: Vijay Gopal v. Big tree Entertainment Pvt. Ltd.
In the present case, the information has been filed by Mr.Vijay Gopal (hereinafter “the informant”), activist and founder of an online movie ticketing portal showtyme, registered under the name of Vanila Entertainments.
In the petition, he alleged that the BookMyShow collects Rs.25 per ticket as a convenience fee from the customers and shares 50% of the same as a commission to multiplexes that is up to Rs.12 to 14. However, it gives a commission of about Rs.6 to Rs.8 only per ticket to the single-screen theatres. While on the other hand, Showtyme gives a commission of Rs.5 to the multiplexes and theatres of Rs.11 while it keeps the rest to itself for running of the business operations. However, the multiplexes and theatres are not been able to avail and associate with Showtyme because of the cash loans or monetary deposits given on zero interests by BookMyShow.
The informant has also alleged that the BookMyShow has signed an “exclusive and refusal to deal” agreements with Opposition 2 to 7 that is, Asian Multiplexes Pvt ltd, Indra Cineplex LLP, Cinepolis India Pvt Ltd, INOX Multiplex, PVR Multiplex and Sudarshan Theatre 35 MM respectively. Such “refusal to deal” agreements ranges between 2-5 years with the theatres to ensure that their movie tickets cannot be sold on any other online platform, thus controlling the complete market. It has also been alleged that BookMyShow with malicious intention has been creating a cartel with theatres and multiplexes and is cutting out competition in the market. Consequently, increasing the price of the movie tickets inclusive of convenience fee up to Rs.19-25 per ticket which is not in the interest of the consumers.
Further, it has also been alleged by the Informant that the practices conducted by BookMyShow are in contravention of Section 4 of the Competition Act that it is abusing its dominant position in market to by imposing unfair and discriminatory conditions on the theatres / multiplexes i.e., making them sign contracts for sale of 100% tickets on its platform. Therefore, denying the access to the market to new comers.
Thus, the informant has prayed before the commission to direct BookMyShow not to sell more that 25% of tickets of any multiplexes/theatres in Telangana and Andhra Pradesh and not more than 50% of the same in the rest of India, and to held that the agreements between Opposition Party (OP) 1 and OP 2-7 as illicit anti-competitive in nature as well as held that the practices of OP 1 are in contravention of Section 4 of the Competition Act that is, it has abused its dominant position in the market that has hindered the Informant’s business.
What is a dominant position in market?
In layman’s term “dominant position” means something or someone who is in a superior position as compared to the other on the basis of some concerned factors. Section 4 (1) of the said Act provides that no enterprise should abuse their dominant position in the market. Such practices incudes-
– “Directly or indirectly imposes unfair or discriminatory conditions in purchase or sale of goods or in price in purchase or sale of goods”.2
– “Limiting or restricting production of goods or provision of services or market or technical or scientific development in regards to goods or services to the prejudice of consumers”. 3
– “Any practice resulting in denial of market access to other enterprises”. 4
– “Any contracts of supplementary obligation subject to the acceptance by other parties which by nature or in accordance to the commercial usage has no connection with subject to such contracts’.5
– “Using the dominant position in one relevant market to enter into or protect other relevant markets.” 6
Section 4 Explanation (a) defines ‘dominant position” as a “position of strength of an enterprise in a relevant market in India, which enables it to operate independently of the competitive forces and wherein its existence affects the other competitors or consumers of the relevant market”. Section 4 covers both exploitative and exclusionary practices. In HT Media Ltd v. Super Cassettes Ltd7 , the CCI observed that pricing abuse can be “exclusionary” that is, pricing strategies adopted by the firms in dominant position to foreclose their competitors, or “exploitative” that is, when a dominant firm is been accused of exploiting its customers by setting up excessive prices. In Shri Shamsher Kataria v. Seil Honda8 , it was held that denial of the market access to the other competitors and excessive pricing is a violation of Section 4 of the Competition Act.
In a recent case of Air Works India (Engineering) Pvt Ltd v. GMR Hyderabad International Airport (GMR) and another9 , the CCI observed that the Rajiv Gandhi International Airport to be an essential facility and GMR was found to be in prima facie violation of Section 4 of the Act for denying the access to the competitor to RGIA. Also, in another case of XYZ v REC Power Distribution Company Ltd10, the CCI noted that establishing a denial of access meant proving ‘anticompetitive effect/distortion in the market in which denial has taken place’.
Response by BookMyShow against the allegations made by Showtyme
Denying all the allegations of the Informant, BookMyShow (OP-1) in its reply before the CCI submitted that it is an intermediary platform that facilitates online booking of tickets for various events including movies, plays, concerts, sports etc. Thus, it is entitled to charge convenience fees from consumers for their services. The Informant has a malafide intention and wants to ruin the reputation of OP 1. It has misrepresented itself as the competitor of OP 1 because of his non-presence in the market. The allegation of creating a cartel and making a barrier for another probable competitor from entering the relevant market by OP 1 is misleading, as the market is evolving and volatile in nature. There are various market competitors with good market presence, for instance, PayTM. Furthermore, OP 1 does not provide monetary assistance in exchange for exclusivity. Conclusively, no prima facie case has been made against OP -1 as the Informant has failed to show any engagement of OP 1 under Section 3(3) of the aforesaid Act and to provide any agreement between OP 1and any other of its associated competitors as a proof to establish any misconduct under Section 3(3) and 4 of the said Act.
Observations of the Commission
After perusing the material on record as well the information available in the public domain, the three-member bench presided by Ashok Kumar Gupta (Chairperson), Sangeeta Verma (Member) and Bhagwat Singh Bishnoi (Member) took cognizance and noted that there is a prima facie case in regards to the conduct of the practices of BookMyShow which therefore needs investigation by the DG in order to determine whether such practices as alleged by the Informant has resulted in contravention of the provisions of Section 4 of the Competition Act 2002. The CCI noted that the exclusive and restrictive agreements between BookMyShow with the multiplexes and single cinema screens, prima facie appears to bear the potential of denying market access to the other competing platforms and new entrants. The cinema theatres as well as the audience are also been denied of their choice of alternate ticketing platforms because of enforcement of such contracts. In regard to the claim that the OP 1 charges high convenience fee from consumers and sharing a part of the same as commission to cinema theatre owners, the Commission noted that it cannot act as a price regulator to assess and determine correct range of fee.
Conclusion
In the light of the above case and the observation of the CCI, the present Report that is to be prepared by the Director General as per Section 26 of the Competition Act will be assessing that whether the practices conducted by BookMyShow consist of any contravention to Section 4 of the said Act, as alleged by the Informant. The Report is yet to be presented before the Commission by the end of the sixty days from the date of the order which is from 16.06.2022.
The above discussion has showcased that there has been several instances of use of the dominant position, therefore making the enforcement and adherence of statutory law more relevant in the current times. With the increasing economic development, market operations and the related malafide actions, it is essential to ensure the independence of business so as to maintain a free and fair market flow. Thus, there should be equal opportunity for everyone to enter and do business in a market for a healthy economy.
1 Re: Vijay Gopal v. Big tree Entertainment Pvt Ltd, Case No. 46 of 2021, COMPETITION COMMISSION OF INDIA
2 Section.4 (2)(a), Competition Act 2002
3 Section.4 (2)(b), Competition Act 2002
4 Section.4 (2)(c), Competition Act 2002
5 Section.4 (2)(d), Competition Act 2002
6 Section.4 (2)(e), Competition Act 2002
7 HT Media Ltd v. Super Cassettes Ltd (2014), Case no. 40/2011
8 Re Shri Shamsher Kataria v. Seil Honda (2014), Case no.3/2011
9 Air Works India (Engineering) Pvt Ltd v. GMR Hyderabad International Airport (GMR) and another, Writ Appeal No 677 of 2019
10 XYZ v REC Power Distribution Company Ltd(2016), Case No.33 of 2014
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