Battle of the Giants: Can CCI Settle T-Series vs. Shetty?

- by Arnav Srivastava & Kalyani Thakur, IVth year student and IInd year student at Rajiv Gandhi National University of Law, Punjab respectively

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Introduction

The release of “Bhool Bhulaiyaa 3” by T-Series and “Singham Again” by Rohit Shetty Picturez stand at loggerheads with each other over the distribution of cinema screens for their respective films. The rivalry between Bollywood’s two biggest production giants has reached the doorsteps of the Competition Commission of India (‘CCI’), with T-Series asserting that the market has tipped in the favour of Rohit Shetty Picturez, leading to denial of equal distribution of screens for their own film, thereby impeding fair market competition. 

 While both the films are equally star-studded, their head-to-head clash seems inevitable, and the onus now lies on the CCI to ensure fair competition between them, where the market is not tilted towards a single production house. While T-Series has asked for a 50-50% allocation of screen-time, a detailed discussion is called for in order to reach a conducive result. Let’s unfold the reasons behind this clash and understand why these production houses are locking horns with each other. 

The Screen Dispute 

Screen time plays an integral role in determining the success of a film, as a significant portion of revenue is generated from theatrical releases. The festival of Diwali, being a high-traffic season, adds a layer of advantage for filmmakers, who want to harness maximum earnings through widespread screen distribution. This race is further amplified with the first-mover advantage, where the film having maximum screen time in the early days gains an edge over the other. 

Both parties in this case are fully aware of the advantages of moving first and thereby wrangling for the maximum share of theater screens to capture maximum viewership. Both these production houses are swinging swords at each other to gain momentum before any market reshuffling of shows occurs, cementing their revenue at the lucrative Diwali box office. 

Why Bring the CCI into the Picture? 

The CCI stands as an umpire, ensuring fair market conditions where no single market player gets an unfair advantage over the other. The Competition Act 2002 bestowed the power on the CCI to scrutinize unilateral or joint actions that could hamper fair competition in the market. The CCI is equipped to issue penalties under Section 27 of the Act and other remedial measures, ranging from structural adjustments to behavioral changes. As a precautionary measure, CCI can proactively intervene and guide market players on the dos and don’t of the Competition Act 2002 through advocacy initiatives provided under Section 49 of the Act. 

Anti-competitive practices arising in the film industry, especially in production, distribution, and exhibition competitiveness, is not a new issue before the CCI. Previously, the Reliance Big Entertainment case of (2013) highlighted the anti-competitive conduct by Multiplex owners where they allegedly blocked certain films from exhibition, thus denying market access to these films. The CCI categorically held that the conduct of the Multiplex owners violated the provisions of the Act.  However, in the Film & Television Producers Guild of India case (2011), the CCI was of the opinion that multiplex owners’ demanding high revenue shares generated out of the exhibition did not run contrary to the provisions of the Competition Act 2002, thereby dismissing the complaint.  

Back in 2012, there was a strikingly similar case to the current one, when Ajay Devgn Films lodged a complaint against Yash Raj Films, alleging the unfair domination of screens by the latter for its films, “Jab Tak Hai Jaan” and “Ekk Tha Tiger.” The informant further contended that the conduct of Yash Raj Films has impeded the release of their film, “Son of Sardaar.” The CCI, dismissing the complaint, held that producers and distributors have the right to negotiate terms independently and seek alternative arrangements if negotiations are unfavourable. 

Challenges Ahead: Timing and Interim Measures

As the festival season looms, time is of the essence for the T-Series. The CCI’s investigations for anti-competitive conduct, under Section 26 of the Act, often involve a prolonged process starting from conducting preliminary inquiries to passing multiple notices, which may cross the festive season and defy the very purpose of filing the case. In such circumstances, the most viable course of action for the CCI is to exercise its interim powers provided under Section 33 of the Act. This section encapsulates the provisions for fast-track investigations in urgent circumstances where competitive balance is at risk. However, interim measures have their own limitations, as balancing screen distribution in the festive season becomes a difficult task. 

The 2023 Competition Amendment Act: A Step Towards Resolution?

The 2023 Competition Amendment Act brought a plethora of modifications to the existing Competition Act 2002, with the aim of overhauling its provisions and greasing the wheels of CCI’s operations and efficiency in resolving competition issues. One noteworthy change is the introduction of commitment and settlement mechanisms, which gives market players an opportunity to bypass prolonged investigations in return for mutually agreeable offers. Both these mechanisms can be exercised against an order passed under Section 26(1) of the Act for alleged violation of Section 3(4) (vertical restraints) and Section 4 (abuse of dominance) cases.

In the current dispute, if the CCI comes at a prima-facie opinion that market is unfairly tilted in favour of Rohit Shetty Picturez, in that case Rohit Shetty Picturez could exercise the commitment and settlement mechanism to opt for a balanced screen distribution agreement with the T-Series and, with CCI’s approval, move forward exhibiting their respective films without distorting fair competition in the market. 

Apart from the commitment and settlement mechanism, CCI could establish Fair Screen Distribution Guidelines to ensure fair distribution of screen-time, specifically during peak seasons like Diwali. This would provide an entry point for all the production houses to have a fair chance of exhibiting their films. Additionally, the CCI could introduce Temporary Screen Cap Policies for High-Demand Periods, where a temporary screen cap is put on a single film to ensure that no single production house monopolizes the market. This step could put an end to the recurring disputes concerning screen distribution in the film industry and ensure fair competition during critical times. 

The Road Ahead for T-Series and Rohit Shetty Picturez 

The T-Series complaint against Rohit Shetty Picturez has once again opened the doors for the CCI to address the competitive tensions arising in the film industry. This case highlights the broader anti-competitive conduct where few big players dominate the market and restrict fair market access for their competitors. The CCI, being the guardian of competition law in India, with the 2023 Amendment, has the potential to pave the way for a more effective and timely resolution of the process. However, uncertainty remains and a need for prompt action is required from the CCI. From the market side perspective, the film industry stands at a unique front, with multiple verticals including production, distribution, and exhibition. Owing to the recurring clashes in this market, an in-depth market study is need of the hour, where the CCI can address potential consolidation of power in the film industry. From an enforcement perspective, the CCI needs to demarcate clear boundaries between right to business and potential vertical collusion. For that, issuing fair screen distribution guidelines is one such way, while a preemtive step like the advocay program in another way to guide the market players on the dos and don’t of the competition law.

The stakes are high, and the CCI’s decision will not only decide this particular case but also set the stage for future film distribution practices in India, influencing how competition policy adapts to safeguard market fairness in the film industry.