Competition commission suggests self-regulations for film business; advises industry bodies to refrain from ban, boycott

Associations in the film industry must refrain from ban and boycotting non-members and look at alternate dispute resolution mechanisms to address disagreements between stakeholders, the Competition Commission suggested on Friday.

The fair trade regulator on Friday released a market study on the film distribution chain in India and mooted various self-regulations that could be followed by the industry.

The watchdog has proposed self-regulations related to multiplexes and producers, Virtual Print Fee (VPF), stakeholders' associations and digital cinema.

According to the Competition Commission of India (CCI), multiplex should refrain from putting any restraint on trade in the exhibition of films that may impinge on producers' freedom of trade.

Also, tailor-made arrangements should be preferred between multiplexes and producers in the pace of standard templates for contracting.

Citing stakeholders, the regulator said that in some quarters of the industry, certain types of anti-competitive conduct, such as bans and boycotts and prohibitions on working with non-members, are still being carried out by associations.

"Associations must refrain from engaging in bans and boycott and prohibiting industry from working with non-members... Associations must consider how alternate dispute resolution mechanisms, such as mediation can be institutionalised, to address any disagreement between stakeholders," the study said.

With respect to the Virtual Print Fee (VPF), the suggestion is that such money paid to a multiplex can be phased out first and later, the same can be phased out for single screens.

"Till the VPF sunset is decided and implemented, Digital Cinema Equipment (DCE) providers and producers should negotiate on mutually acceptable VPF charges and ensure that there are no disruptions in the exhibition of films on account of VPF," the study said.

VPF is a subsidy that producers/distributors pay to enable exhibitors to cover the cost of converting their analogue projectors into digital ones.

Another key recommendation put forth by the CCI is that agreements that digital service providers enter with exhibitors or producers, as the case may be, should have scope for negotiations for reducing the bargaining power imbalance.

Also, long-term agreements with one-sided clauses should be avoided.

The study highlights some of the key competition issues in the film distribution chain as identified by stakeholders, the regulator said.

In recent times, the CCI has come out with market studies on the cab aggregators, pharma, telecom sector and e-commerce.

Such studies are carried out for the purpose of enforcement and advocacy and also help uncover the new parameters of competition.