What is Competition Commission of India (CCI)
The CCI is a statutory body established under the Competition Act, 2002.
It is responsible for promoting and sustaining competition in the Indian market.
Also protecting the interests of consumers and ensuring freedom of trade.
Investigate anti-competitive agreements and practices
Inquire into the abuse of dominant position by enterprises
Regulate mergers and acquisitions
Impose penalties on enterprises that violate the Competition Act
The CCI has played a significant role in promoting competition in the Indian economy.
It has investigated and penalized several enterprises for anti-competitive practices, and has also cleared a number of mergers and acquisitions.
The CCI's work has helped to create a more level playing field for businesses and has benefited consumers by promoting lower prices and better quality goods and services.
In 2023, the CCI imposed a fine of ₹2,423 crore on Google for abusing its dominant position in the online search market.
What are the Functions and Role of CCI?
Anti-competitive agreements:
Investigates and prohibits agreements between enterprises that restrict competition, such as price-fixing, bid-rigging, and market allocation.
Ensures that businesses compete fairly and consumers have choices.
2. Abuse of dominant position:
Prohibits enterprises with a dominant position in the market from abusing their power to harm competition or consumers.
Prevents practices like predatory pricing, discriminatory pricing, and refusal to deal.
Regulation of combinations:
Reviews and approves or prohibits mergers, acquisitions, and amalgamations that could have an appreciable adverse effect on competition.
Ensures that mergers and acquisitions don't lead to monopolies or decreased competition.
4. Advocacy and awareness:
Creates awareness about competition law and its benefits among businesses, consumers, and government agencies.
Conducts training programs and workshops to educate stakeholders.
International cooperation:
Collaborates with other competition authorities around the world to promote competition and consumer welfare globally.
Works with international organizations like the OECD and UNCTAD.
Advising the government: Provides advice to the Central Government on competition issues relating to policy formulation and legislation
Regulatory coherence: Works to ensure that sectoral regulatory laws are consistent with the principles of competition law
Consumer protection: Protects the interests of consumers by ensuring that they have access to competitive markets.
Market research: Conducts market studies and research to identify potential competition issues and assess the impact of its interventions.
Enforcement: Has the power to conduct search and seizure operations, impose penalties, and pass cease-and-desist orders to ensure compliance with competition law.
What were the allegations on PVR
PVR denied the allegations.
It said that the allegations were not backed by evidence.
The chain argued that the purpose of the complaint was to “pressurise” it to exhibit his film, in the absence of any legal obligation to do so.
PVR clarified that it has no special tie-ups or recurring/long-term arrangements.
Further, the terms of agreement, including those of promotion, agreed upon with independent film makers were similar to those with larger production houses.
More importantly, the multiplex chain said that it was not in their interest to accord preferential treatment to a specific producer or distributor, and that it does not offer any preferential treatment to its own films.
It argued that a majority of its exhibition revenue is earned from films produced and distributed by third parties. PVR clarified that screen allocation
is determined on “mutually objective criterion” — this primarily entails the revenue generation potential of the movie.
What does the CCI’s order say?
After examining the submissions of the multiplex chain, CCI concluded that there existed no perceptible concern about competition.
Its order held that the commercial wisdom of the exhibitors is largely driven by consumer demand.
Unless harm to competition was apparent, any intervention on its part would only lead to “undesirable consequences,”.
This would amount to taking away the autonomy of the entities and substituting that with the decisions of the regulator.
About vertical integration, the order held that it was not per se prohibited under the provisions of the Competition Act.
Further, the complainant had not submitted any evidence to substantiate these allegations.
It held that most of the agreed terms for both independent filmmakers and larger production houses were largely the same — including revenue sharing terms.
Finally, upholding autonomy in screen allocation, the regulator concluded that the guiding factor for selection and allocation was maximisation of revenue.
The specific criteria include the revenue generating potential of the movie, the buzz around the film, marketing, advertising and promotions done etc.
COMMENTS