India: Determination Of Relevant Market Under Competition Act, 2002

The Supreme Court vide its order dated March 7, 2017 in Competition Commission of India v. Coordination Committee of Artist and Technicians of WB Films and Television1 has made observations on issues such as the role and scope of relevant markets, the definition of an 'enterprise' and what would constitute an agreement in determining violations of the provisions of Section 3 of the Competition Act, 2002 (hereinafter referred to as the "said Act").

Brief Background of the Case

M/s BRTV, the producer of "Mahabharata", had entrusted the sole and exclusive rights of the serial to M/s. Magnum TV Serials to dub the Hindi version in Bangla language. M/s. Magnum TV Serials was also given the rights to exploit its Satellite, Pay TV, DTH, IPTV, Video, Cable TV and internet rights on the dubbed version till September, 2016. Thereafter, M/s. Magnum TV Services appointed M/s. Hart Video (hereinafter referred to as "Hart Video") as the sub-assigner to dub the serial in Bangla language.

For the purpose of broadcasting the dubbed series an agreement was entered into for telecasting it on two TV channels viz., 'Channel 10' and 'CTVN+'. However, two associations, namely the Eastern India Motion Picture Association (hereinafter referred to as "EIMPA") and Committee of Artists and Technicians of West Bengal Film and Television Investors (hereinafter referred to as the "Coordination Committee"), opposed the screening of the dubbed series on the grounds that it would adversely affect the artists and technicians working in West Bengal by acting as a deterrent to production of such serials in Bangla.

Through written letters, both EIMPA and the Coordination Committee threatened non-cooperation to 'Channel 10' and 'CTVN+', if they telecast the dubbed serial. Thereafter, Hart Video filed a complaint with the Competition Commission of India (hereinafter referred to as "CCI"), requesting the CCI to take actions against the two associations for violations of the provisions of the said Act.

Order of CCI

The CCI formed a prima facie opinion that there existed an anti-competitive concern and accordingly directed the Director General (hereinafter referred to as "DG") to investigate the complaint. The DG during the course of investigation found that the details contained in the information supplied by Hart Video were factually correct. The DG in his report defined the relevant market as the market for 'film and television industry of West Bengal' and concluded that the acts of the Coordination Committee and EIMPA threatening non-cooperation in the telecast of such serial amounted to foreclosure of competition by hindering entry into the market. Therefore, the actions of the two associations amounted to an anti-competitive agreement and there was violation of Section 3(3) (b) of the Act.

A major contention raised by the Coordination Committee was that it comprised of artists and technicians that worked in the West Bengal Film and T.V. Industry and consisted of West Bengal Motion Picture Artists' Forum and Federation of Cine Technicians and Workers of Eastern India only and was, in fact, a trade union of the artisans and technicians under the Trade Union Act.

Therefore, it was argued that the Coordination Committee was neither an 'enterprise' nor was it a 'person' or 'association of persons' who were in the business of production, supply and distribution or providing services etc. Further, their actions would not fall under Section 3(1) of the said Act but were instead part of their constitutional right to protest.

The majority order of the CCI agreed with the findings of the DG and held that the association has led the TV channels not broadcasting the TV Serial and as a result violated Section 3(3) (b) of the Act. The submissions made by the Coordination Committee were accepted and the CCI held that although such associations did not fit into the definition of an 'enterprise' and accordingly could not be subject to claims of abuse of dominance. However, the CCI observed that they were subjected to the provisions of Section 3(3) since the Co-ordination Committee comprised of associations whose members are engaged in televisions and film industry.

Appeal to Competition Appellate Tribunal

The Coordination Committee appealed against the majority order of the CCI to the Competition Appellate Tribunal (hereinafter referred to as "COMPAT"). The COMPAT held that the CCI and DG had erred in defining the relevant market with the relevant market being 'telecasting of dubbed serial on television in the State of West Bengal' and not the 'film and television industry of West Bengal'.

Further, the COMPAT held that the complaint could not be scrutinized under Section 3 and hence there could be no contravention of Section 3 of the said Act. COMPAT concluded that since the Coordination Committee was not trading in any groups, or provisions of any services, much less by the persons engaged in identical or similar trade or provisions of services, no agreement as envisaged under the provisions of Section 3 of the said Act was entered into.

Questions before the Supreme Court:

The CCI appealed the decision of COMPAT before the Supreme Court. The Supreme Court identified that there were two issues for determination:

  1. What is the exact relevant market for the purposes of inquiry into the impugned activity of the Coordinated Committee? and
  2. Whether the action and conduct of the Coordination Committee is covered by the provisions of Section 3 of the Act?

It is pertinent to note that the Supreme Court did not adjudicate on the issue whether the activities of the Coordination Committee amounted to abuse of dominant position as the majority view of the CCI had previously accepted that the impugned activities of the Coordination Committee did not amount to abuse of dominant position.

Observations of the Supreme Court

  1. What is the exact relevant market for the purposes of inquiry into the impugned activity of the Coordinated Committee?

    • The Supreme Court observed that the objective of defining a relevant market in both its product and geographic dimension was to identify those actual competitors of the undertakings involved that were capable of constraining those undertakings behaviour and of preventing them from behaving independently of effective competitive pressure.
    • The concept of relevant market implies that there could be an effective competition between the products which form part of it and this presupposes that there is a sufficient degree of interchangeability between all the products forming part of the same market insofar as specific use of such product is concerned and the CCI must look at evidence that is available and relevant to the case at hand while determining the relevant market.
    • The Supreme Court held that COMPAT had taken a myopic view of the relevant market and referring to letters written by the Coordination Committee which themselves stated that the proposed broadcast of the dubbed serial would adversely affect the 'TV and Film Industry of West Bengal', held that this would be the relevant market in which an assessment would need to be made on the question of whether competition was affected.
  2. Whether the action and conduct of the Coordination Committee is covered by the provisions of Section 3 of the Act?

    • The Supreme Court observed that the term 'enterprise' was wide in nature and may refer to any entity, regardless of its legal status or the way in which it was financed and, therefore, it may include natural as well as legal persons.
    • The agreement referred to in Section 3 of the Act has to relate to an economic activity which is generally understood to mean offering products in a market to consumers. For example, an individual acting as a final consumer would not be considered as an enterprise or a person envisaged, as he is not carrying on an economic activity.
    • The Supreme Court, therefore, found that the Coordination Committee was an 'enterprise' as it was engaging in an economic activity. Further, the Supreme Court held that the prohibition of exhibition of dubbed serial prevented competing parties pursuing their commercial activities and also hindered competition in the market. Therefore, the Supreme Court affirmed the CCI's order and set aside the COMPAT's judgment and observed that the activities of the Coordination Committee amounted to violation of Section3(3)(b) of the said Act.

Conclusion

This is one of the first decisions of the Supreme Court with regards to the Competition Act, 2002 and the observations made in the present case are likely to have wide reaching implications on how investigations and assessments will be conducted by the CCI and DG in case complaints are made pertaining to violations of the provisions of Section 3 of the said Act.

Footnote

1. Civil Appeal No. 6691 of 2014

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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