1. BACKGROUND
1.1. On June 16, 2022, the Competition Commission of India ("CCI") directed the Director General to investigate the alleged abuse of dominance by Big Tree Entertainment Private Limited ("BookMyShow") in the market for online intermediation services for booking of movie tickets in India.1 The complaint was filed by an individual ("Complainant"), who sought to compete with BookMyShow through its own platform for online booking of movie tickets i.e., Showtyme.
1.2. The Complainant alleged that BookMyShow abused its dominance by: (i) entering into exclusive agreement/ arrangement(s) with certain cinema theatres in the city of Hyderabad, Telangana. As such, the Complainant was allegedly prevented from offering the services of its website Showtyme to cinema theatres for online booking of movie tickets due to the exclusivity imposed by BookMyShow on the cinema theatres; and (ii) charging high convenience fee from the cinegoers for online booking of movie tickets.
2. DELINEATION OF RELEVANT MARKET
2.1. The CCI observed that BookMyShow operates as a two-sided platform; one for the cinegoers who visit the website/ mobile app for booking of movie tickets; and the other for the cinema theatres, who list the movies for exhibition and sale of tickets. Thus, the CCI held that BookMyShow acts as an online intermediary for booking of movie tickets. Further, given the: (i) ease of use; (ii) convenience of booking; and (iii) reduced search costs owing to aggregation of movie tickets of multiple cinema theatres, the CCI observed that a large segment of cinegoers as well as cinema theatres perceive online intermediation services for booking of movie tickets as distinct, which is not interchangeable or substitutable by other modes of booking.2 In view of the above, the CCI delineated the relevant product market as 'market for online intermediation services for booking of movie tickets'.
2.2. As regards the relevant geographic market, the CCI observed that the online platforms provide their services pan-India and face similar competitive constraints throughout India, therefore, the relevant geographic market should be India. Accordingly, the relevant market was delineated as 'market for online intermediation services for booking of movie tickets in India'.
3. FINDINGS ON DOMINANCE
3.1. The CCI observed that for assessing dominance of an online platform, market share of the online platform needs to be assessed in conjunction with its reach, scale and network effects that work in its favour, leading to huge consumer footfalls and thereby making presence on the online platform critical for visibility and competitive ability of cinema theatres. As such, the CCI found the data provided by BookMyShow regarding its share of movie tickets sold vis-à-vis the total number of movie tickets sold in India, inconsistent and untenable,3 hence the CCI chose not to rely on it. For computing market share, the CCI relied on publicly available reports, which revealed BookMyShow's market share as 78% for online booking of movie tickets by volume, with its nearest competitor, PayTM having a meagre market share of 13%. Further, the CCI observed that the exclusivity imposed by BookMyShow and various other provisions of the agreements with cinema theatres, highlighted the position of strength and superior bargaining power of BookMyShow in deciding contractual terms. Therefore, the CCI prima facie found BookMyShow to be dominant in the relevant market.
4. FINDINGS ON ABUSE OF DOMINANCE
4.1. The CCI observed that exclusive agreements entered into by BookMyShow prevented cinema theatres to engage any other entity (directly or indirectly) for providing services similar to the services of BookMyShow or facilitate booking/sales of movie tickets through any online medium. Such exclusivity provisions have the potential to foreclose or reduce competition in the relevant market by creating barriers to entry for new players as they may make rival intermediary platforms or new entrants incur significant additional cost to induce the cinema theatres to give up their exclusive contracts with the leading platform with market power.
4.2. In relation to the monetary deposits made by BookMyShow to the cinema theatres, the CCI rejected BookMyShow's contention that the deposits were made towards payment obligations for providing online intermediation service for booking of movie tickets to cinema theatres. As such, the CCI observed that specifying the quantum of deposit and connecting it to the number of competitors of BookMyShow that can be contracted by the cinema theatres, prima facie indicate an attempt to disincentivise and dissuade cinema theatres to associate with any platform other than BookMyShow. Further, based on the agreements entered by BookMyShow with single screen theatres, the CCI observed that the reservation of seats during the term of an agreement is likely to restrict the ability of cinema theatres to sell movie tickets during the period of such agreements.
4.3. In relation to data collection by BookMyShow, the CCI observed that for single screen theatres, BookMyShow reserved the right of data collection, ownership and storage without the single screen theatres having any right to such data. However, for multiplexes, the collected data was shared by BookMyShow with them. In light of the above and based on the publicly available interview of BookMyShow's founder on the importance of data monetization to its business, the CCI opined that exclusivity over collection and storage of data could increase the bargaining power of BookMyShow over time and may further strengthen the network effects in its favour.
4.4. Lastly, in relation to the high convenience fee charged by BookMyShow, the CCI observed that it cannot act as a price regulator to determine the correct fee. However, such high fees could be seen as a result of the exclusive arrangements by BookMyShow causing softening of competition and discentivising BookMyShow to charge a lower fee.
5. INDUSLAW VIEW
5.1. Pursuant to the massive growth of e-commerce in India in the recent years and the market study conducted by the CCI on the e-commerce sector in 2019, it appears that the CCI's focus currently is regulating competition in the digital market. As such, since publishing its findings on the market study on e-commerce in January 2020, the CCI has initiated approximately 6 investigations into the conduct of prominent players operating online platforms in various product/ service segments of the digital market, such as, markets for online intermediation services for: (i) sale of smartphones;4 (ii) booking of hotels in India;5 and (iii) food ordering and delivery.6 By way of the instant order, the market for online intermediation services for booking of movie tickets is the latest addition in the CCI's scrutiny of digital markets in India. The instant order is also in-line with the CCI's recent investigation orders against prominent players operating online platforms, where the CCI has highlighted the competitive risk owing to exclusivity over the data gathered by them. Hence, even prominent players operating online platforms, which are generally not regarded as 'data gatekeepers' may require a review of their data collection and sharing arrangements to mitigate any potential competition law concerns.
5.2. Further, on a review of the orders directing investigation in the digital sector, it appears that the CCI is now inclined to also direct an investigation in cases/ markets on the mere likelihood of potential adverse effect on competition without having some evidence of foreclosure of competition at the time of ordering the investigation. Thus, the online platform operators that are prominent players in a particular product/ service segment must exercise caution and refrain from engaging in anti-competitive conduct as now there is an increased likelihood of the CCI's scrutiny.
5.3. In order to mitigate the above risks while fostering a conducive environment for the growth of e-commerce in India, on June 15, 2022, the Parliamentary Standing Committee published a report on the promotion and regulation of e-commerce7 inter-alia recommending the CCI to formulate a mandatory code of conduct that clarifies acceptable conduct between operators of e-marketplaces and their business users and consumer. It was suggested that the code should comprise of core principles as well as a list of hardwired dos and don'ts8 and must be tailored to the business model of the online platform. Adoption of this code will not only help the CCI in regulating an extremely dynamic sector but also provide clarity to online platform operators on acceptable business practices from competition law perspective.
Footnotes
1. Case No. 46 of 2021, Vijay Gopal v. Big Tree Entertainment Private Limited (BookMyShow) and Others, order dated June 16, 2022, available at: https://www.cci.gov.in/antitrust/orders/details/1038/0.
2. The CCI observed that the services provided by online intermediation platform for booking of movie tickets cannot be offered in the same manner either by online sites of multiplexes/single screen theatres or even by the BoxOffice. Further, online movie ticket booking services provide information regarding the complete array of movies and theatres and their prices, availability of seats, and other offerings available, which cannot be comparable with the less features and convenience provided by other forms of movie ticket booking services.
3. The CCI observed that the market share data provided by BookMyShow (by value) pertained to the total number of tickets sold, which should have been provided based on the actual value of the tickets sold by it in INR crores.
4. Case No. 40 of 2019, Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and Another, order dated January 13, 2020, available at: https://www.cci.gov.in/search-filter-details/1105.
5. Case No. 14 of 2019, Federation of Hotel & Restaurant Associations of India (FHRAI) v. MakeMyTrip India Private Limited (MMT) and Others, order dated October 28, 2019, available at: https://www.cci.gov.in/antitrust/orders/details/113/0.
6. Case No. 16 of 2021, National Restaurant Association of India v. Zomato Limited and Others, order dated April 4, 2022, available at: https://www.cci.gov.in/antitrust/orders/details/6/0.
7. 172nd Report on Promotion and Regulation of E-Commerce in India, Department Related Parliamentary Standing Committee on Commerce, Rajya Sabha, Parliament of India, available at: https://rajyasabha.nic.in/rsnew/Committee_site/Committee_File/ReportFile/13/159/172_2022_6_14.pdf.
8. It was recommended that certain practices that may be prohibited ex-ante, subject to the business model of the platform to include: (i) self-preferencing; (ii) discriminatory treatment between business users; (iii) using data in an anti-competitive manner; and (iv) most-favoured nation clauses in contracts between business users and the platform.
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.