NEW DELHI: A film producer has the right to choose his own digital cinema provider, and there is nothing “unreasonable or anti-competitive” in keeping out other providers, the Competition Competotion of India has held.

Rejecting an objection by K Sera Sera, a four-member bench comprising chairperson Devender Kumar Sikri and members S L Bunker, Sudhir Mittal and U C Nahata said there was no contravention of Sections 3 and 4 of the Competition Act 2002, on part of the producers of Vidya Balan-starrer Kahaani2 for entering into an agreement with two digital media service providers exclusively for the distribution of their movie. Indiantelevision.com reached out to K Sera Sera, and its media relations agency said they have no comment to offer.

In a nine-page order, the CCI found nothing wrong with the agreement between the producers Pen Movies, UFO Moviez India and Real Image Media Technologies, after examining facts put on record by the informant K Sera Sera's lawyer Rachit Batra and producer’s counsel Rishi Agarwala, appearing on behalf of Naik Naik & Co.

The Commission said the producer of a movie/ content manufacturer, availing the services of digital cinema providers as a consumer, has the right to decide the digital cinema service providers of its choice to distribute its movies. K Sera Sera informed the Commission that the producers had entered into this “anti-competitive arrangement/ agreement” with a view to limit/ control the release of movie Kahaani 2.

It had been alleged by K Sera Sera that the producers had provided the contents of its earlier movies for release through K Sera Sera's technology on several occasions in the past. However, they had refused K Sera Sera to supply the content of movie Kahaani 2. 

It had also been claimed that representatives of the producers circulated “a discriminatory dictat to various distributors, bookers and theatres stating that they would rule the digital cinema service market and kill the business of other digital cinema service providers such as the informant”.

Thus, the informant K Sera Sera requested the commission to inter alia impose penalties on the producers for entering into anti-competitive agreement and direct them to discontinue their present practice of refusal to deal with the informant. However, lawyers of the producers enclosed copies of a news article dated 11 January 2017, regarding an FIR filed by the film production house of movie Force 2, Viacom18, against the informant (K Sera Sera) for online piracy. 

The news article had reported that the movie Force 2 was released on 18 November 2016, and the pirated version of the movie was available in full length on various websites for unauthorised download and streaming soon after.

It was reported that Viacom18 had developed an internal security mechanism, in the form of unique identifiers for each copy of the said film, before the digital content packages (DCPs) were distributed to the digital integrators in order to tackle the menace of online piracy and to identify the source of leak, if any. Investigations conducted by Viacom18 revealed that pirated copies had originated from the copy that was sent to the informant for digital integration.

The commission observed: “Section 3(5)(i)(a) of the Competition Act clearly provides that application of Section 3 shall not restrict the right of any person to impose reasonable conditions as may be necessary for protecting any of its rights conferred upon under the Copyright Act, 1957.”

It added that the decision of the producers to refuse to exhibit their movies through the Informant’s digital service, “with whom producers have had issues of piracy earlier, appear to be taken as a precautionary step to prevent any loss due to piracy…. It may be noted that the very objective of competition law is to protect the interest of consumers and the process of of competition. It is not concerned with the harm to the competitors unless that also leads to harm to the consumers. Thus, the Commission is of the view that the alleged conduct of the producers in refusing to provide the content of the movie ‘Kahaani-2’ to the Informant does not appear to be unreasonable and anti-competitive.”

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