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CCI slaps 27 Bollywood mogul wrists with Rs 1 lakh fines

CCI fine: Cheaper than staying in a Mayfair hotel
CCI fine: Cheaper than staying in a Mayfair hotel
Breaking: The Competition Commission of India (CCI) has ruled on the first ever case to enter its doors, levying nominal fines against prominent film producers in the case brought by Luthra & Luthra on behalf of cinema owners two years ago.

The CCI imposing a penalty of Rs 1 lakh each against 27 major film producers for abusing their dominant positions and entering into anti-competitive agreements against the cinema owners federation.

The CCI passed the 113-page order on 25 May 2011, directing the film producers to cease future anti-competitive practices and to pay an aggregate penalty of Rs 27 lakh for having violated sections 3 and 4 of the Competition Act 2002.

“The Commission after considering cumulative effect of all the mitigating factors in the context of peculiar facts and circumstances of the instant case, is of the opinion that ends of justice would be met if a penalty of Rs.1,00,000/- (Rupees One Lac only) is imposed upon each of the opposite parties under section 27(b) of the Act in addition to cease and desist order under section 27(a) of the Act,” said the commission in the order.

The case 1/2009 was started in July 2009 as the very first cartel investigation of the new competition regulator following that year’s cinema strikes and disputes with film producers and distributors, as first reported by Legally India. The strike and dispute were partially settled between the parties shortly after the CCI complaint.

The CCI order summarised:

“It was alleged by the informant that the respondents [the United Producers/Distributors Forum (UPDF) and others] produce and distribute almost 100% of the Hindi Films produced/supplied/distributed in India and thereby exercise almost complete control over the Indian Film Industry.

“It had been further alleged that UPDF vide their notice dated 27.03.2009 had instructed all producers and distributors including those who are not the members of UPDF, not to release any new film to the members of the informant for the purposes of exhibition at the multiplexes operated by the members of the informant. It had been further informed that being aggrieved by the decision of UPDF various members have approached the informant and sought its assistance.

“It had been alleged that the above notice was sent to the members by UPDF because of the conflict between the producers/distributors and the members of the informant on revenue sharing ratio.”

The Luthra team was led by senior partner Bobby Chandhoke, partner G.R. Bhatia and senior associate Ravisekhar Nair.

The producers include Yash Chopra of Yash Raj Group, Aamir Khan, Shahrukh Khan, Karan Johar, Ramesh Sippy, Ronnie Screwvala, Ramesh Taurani of Tips Industries, Ramesh.G. Sippy, Ashutosh Gowariker of AG Pvt. Ltd., Vidhu Vinod Chopra, Rakesh Roshan of Film Craft Private Ltd.

The CCI also passed a final order that the National Stock Exchange (NSE) abused its dominant position in the currency derivatives markets against MCX, fining it for up to 10 per cent of the company’s annual turnover.

Download the full CCI order here.

Photo by Mark Strozier

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