?Producers, distributors acted against multiplexes during face-off?

The director-general of investigation (DGI) in the Competition Commission of India has stated that producers and distributors colluded and restricted the supply of content to multiplexes from April to May 2009. The two parties had had a face-off over the sharing of revenue. Based on the report, the competition watchdog is likely to issue notices to associations of producers and distributors over the next few days.

According to sources, the acting DGI has said producers and distributors ?formed a nexus and restricted supply of movies to get more revenue from multiplexes?. This is in violation of section 3 and section 4 of the Competition Act 2002, pertaining to anti-competitive agreements and abuse of dominant position, respectively.

Producers and distributors will now have to submit their response to the notices. After hearing their pleas, the Competition Commission will decide further course of action. When contacted, Dhanendra Kumar, chairman, CCI, refused to comment.

According to the DGI?s report, producers and distributors have been found guilty of acting in ?concert and collusion which affected the consumers at large as they could not watch movies due to the stand-off?. The episode also impacted the business as no new film was released in multiplexes across the country.

The stand-off between multiplexes and producers-distributors was first referred to the competition watchdog after the two sections were notified in May this year. Multiplexes Association of India had moved the Competition Commission alleging that the United Producers and Distributors Forum, the Association of Motion Pictures, TV Program Producers and the Film and TV Producers Guild of India, had formed a nexus and were restricting the supply of content (films). They were dictating prices and not allowing multiplexes to sell tickets below a price set by them, the multiplex association had alleged.

The association contended that blocking new releases had affected business and ultimately, the consumers, and that this was anti-competitive and cartel-like behaviour. There are over 850 multiplexes in India and these generate about 60% of the total revenue. The producers were pushing for a 50:50 revenue sharing model, irrespective of the stars, budget and box office collections, against a ratio of 55:45, in favour of the multiplexes, then. Since multiplexes did not yield, producers and distributors stopped the supply of content or films to them. This, industry sources said, resulted in losses to the tune of Rs 100 crore a month to both the sides.

After hectic parleys, producers, distributors and multiplexes reached an agreement in June and announced that producers would get 50% of the revenue in the first week, 45% in the second, 40% in the third and 30% in and after the fourth week. Distributors would also earn an additional 2% if the film did well on box office.