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K Sera Sera Digital Cinema Pvt. Ltd. v. Digital Cinema Initiatives, LLC and ors. - (Competition Commission of India) (08 Jun 2016)

Hollywood studios not abusing position by mandating theatre equipment

MRTP/ Competition Laws

The Competition Commission dismissed a complaint against film studios Disney, Fox, Sony Pictures Entertainment and more alleging they were abusing their dominant by mandating what equipment their films could be shown on. It held film studios spending effort and expense in developing their films are entitled to reasonably protect their films by demanding use of compliant equipment.

The complainant had claimed that the studios had entered into an anti-competitive agreement, in the form of Digital Cinema Initiatives, to release their movies in India in digital form only through DCI compliant services and projectors. It also claimed its digital cinema technology was at least of comparable quality and was used in 300 theatres across the country. Notably, Bollywood producers had not placed technological conditions on informant or similarly placed companies.

The Commission noted the benefits of DCI specifications devised by the six studios, not least: an absence of proprietary formats, image quality and encryption to prevent piracy.

Informant’s complaint that by mandating use of DCI equipment, studios were effectively setting the price were found to be unsubstantiated and inaccurate. Members noted that the price of a cinema ticket on several other factors such as the movie itself, location of cinema, ambience of surroundings and more.

Informant’s claims of being discriminated against were also found disingenuous, with the CCI observing the company to have been formed only recently, its awareness that studios did not release films on non-DCI equipment and prosperity showing non-Hollywood movies.

In 2013, of 1602 movies released in India, only 53 were movies from Hollywood. Of the total revenue earned by the Indian film industry only 5 per cent was from such films.

CCI had previously dismissed the complaint for failure to raise competition concerns, however the Competition Appellate Tribunal had disagreed and remitted the matter back to the CCI.


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