CCI:Internal restrictions on film distribution within the country are illegal
Indian government has ruled that some of the internal restrictions on
film distribution within the country are illegal and must be
dismantled.The ruling came from the Competition Commission of India,
which had been petitioned in 2010 by in a complaint against regional
distributor associations including the Karnataka Film Chamber of
Commerce and Bihar and Jharkhand Motion Pictures Association concerning
the film Kites.
The studio was subsequently joined by two other industry giants UTV
Software Communications Ltd and organisations Eros International Media
Ltd, and by the FICCI Multiplex Association of India.CCI (Competition
Commission of India) India's
trade practices regulator has penalised 12 state film associations
across the country for taking anti-competitive decisions, including
discrimination against Hindi films and forcing producers to become their
members.
The (CCI) has asked film associations of Karnataka,
Andhra Pradesh, Tamil Nadu, Bihar and Orissa, among others, to pay 10%
of their annual income to the different petitioners, after clubbing all
similar cases filed by different producers against different
associations.
Producers such as UTV, Reliance Entertainment, and
Eros called it a landmark judgment that will change the dynamics of film
business, while officials of some state film associations said they
will challenge the order in higher courts.
The CCI imposed a fine on the associations equivalent to 10% of their
past three years revenues.The decision favours those groups which want
to build nationwide
releasing and exhibition operations, where India was previously an
amalgam of states each with different rules and regulations for cinema.
UTV said that the regional associations put restrictions on the number
of screens a film from outside its region could occupy; that the
distributor was obliged to register its films with the regional
associations; and that the associations set release holdbacks that meant
the film could not be exploited on satellite TV or in home
entertainment sectors.
In 2010, UTV had filed a case against distributor
associations like KFCC (Karnataka Film Chamber of Commerce) for putting a
restriction on the number of cinemas to release a non Kannada film and
BJMPA (Bihar and Jharkhand Motion Pictures Association) for demanding
unreasonable hold backs for registering its films.
They barred studios from exploiting satellite and home
video rights in the respective regions and compelled the studio to
register films with the trade body and bend to their archaic rules. As a
result, this constrained the market access of the studio for unfettered
distribution of its films on non theatrical platforms.
CCI ruled that the anti-competitive behaviour of
any entity needs to be condemned heavily for effective function of the
market. Further, it said that the associations are taking decisions and
engaging in practices which are anti-competitive. Consequently, in Feb
2012, the CCI has imposed a hefty penalty on these distributor
associations; to be deposited with immediate effect to the commission.
The order clarifies that the associations will have to stop (a)
Compelling the producers/distributors/ exhibitors to become their
members as a pre-condition for exhibition in their territories; (b)
Discrimination between regional and non-regional films and imposing
discriminatory conditions against non-regional films; (c) Screen
restrictions based on language or manner of exhibition of a film to be
done away with; (d) Holdbacks on satellite and home video, with studios
are free to decide such holdbacks; (e) Compulsory registration of films
as pre-condition to release to be done away with.
The CCI ruled five kinds of behaviour to be illegal:
*Compelling the producers/distributors/ exhibitors to become their
members as a pre-condition for exhibition in their territories;
*Discrimination between regional and non-regional films and imposing discriminatory conditions against non-regional films;
*Screen restrictions based on language or manner of exhibition of a film;
*Holdbacks on satellite and home video, with studios free to decide such holdbacks;
*Compulsory registration of films as pre-condition to release.
"This order will pave way for opening up business opportunities,
increased revenues for filmmakers and will remove the intermediaries and
extortionists once for all," said Sanjeev Lamba, CEO, Reliance Entertainment
"This judgement by the CCI will stand out as a landmark event in the
history of the Indian film industry. It unshackles producers and
distributors from the draconian and archaic bylaws of defunct
associations, driven by vested interests," said Siddharth Roy Kapur CEO,
UTV Motion Pictures.
"It is a huge step forward in ensuring that the rules that govern the
Indian movie business are reflective of current business practices, and
not those practised in the last century."Media agencies
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