With the Competition Commission of India (CCI) coming down strongly on a dozen state film associations and trade bodies, ordering them to do away with their anti-competitive practices and penalising them, major stakeholders of India?s R10,000-crore film business ? producers, distributors and exhibitors ? stand to gain.
Though the local trade bodies have challenged the CCI order, production houses, distributors and multiplex operators say that the judgement will create an ?open marketplace? and help in a ?wider release? of a film in the country. It will also exempt producers from the fee they paid these trade bodies, who ?forced? them to register their films before release.
?The CCI has taken a far-reaching decision, which will eliminate the restrictive middlemen in the film business,? says Sanjeev Lamba, chief executive officer, Reliance Entertainment, the film production arm of ADAG.
All limitations on the satellite or home video rights of a film will also cease to exist now. ?The monetary gain will differ from film to film and language to language, but this decision will benefit the entire industry,? says Lamba.
In 2010, production houses like Reliance Entertainment, Eros International and UTV Motion Pictures had filed complaints against these trade bodies stating that ?these associations were making it compulsory for every film distributor and exhibitor in their respective territories to become the member of the respective association and register his film with them.?
Producers and distributors who refuse to become members or register their films ?were not allowed to release their films in the concerned territories governed by the respective association.?
On February 22, the CCI ordered the associations to do away with these restrictions. ?The commission finds that the anti-competitive behaviour of any entity needs to be condemned heavily for effective function of the market,? it said in its order. ?Therefore, it deems fit that such anti-competitive acts and conduct be penalised, which should also act as a deterrent for any other association engaged in taking similar decisions.?
?Penalties for anti-competitive agreements are to be imposed either on turnover or profit. Since the associations do not have turnover of their own, the commission has imposed 10% penalty on the income that gained from exploiting the stakeholders,? the judgement added.
Media analysts say that big corporatised film production houses stand to benefit as they get complete independence to devise ?a pan-India distribution and exhibition strategy?.
?With no caps on a film?s release, producers can execute their release much better,? says Jehil Thakkar, executive director, media and entertainment at audit and consulting firm KPMG India. ?Their business model will be more consistent across the country and threats from local distributors will also be negated.?
For listed film exhibitors like Inox, Big Cinemas, Cinemax and PVR, wider release of a film means higher revenues from increased number of theatres and cineplexes.
?About 10-15% of our screens are in the states whose local film bodies have been penalised,? says Sunil Punjabi, chief executive officer, Cinemax. ?So it is definitely a positive for us as it opens up the market and allows us to do business more freely.?
The associations impacted by the judgement are Eastern India Motion Picture Association, Central Circuit Cine Association (Amravati, Jaipur and Indore), Hyderabad State Film Chamber of Commerce, Northern India Motion Pictures Association, Indian Motion Pictures Distributors Association, Orissa Film Distributors Syndicate and The Chennai Kanchipuram Thiruvallur District Films Distributors Association, Karnataka.