New Delhi: Fair trade regulator CCI has directed a probe into multiplex chain PVR INOX over alleged abuse of dominant position in continuing to levy virtual print fee on producers, even after cinema halls fully shifted to digital projection.
In a 33-page order passed by CCI on Tuesday, the fair-trade regulator said “there exists a prima facie case of contravention of several provisions under Section 4 of the Competition rules against OP-3 (PVR INOX Ltd).
Section 4 of the competition rules refers to the abuse of dominant position.
Accordingly, the CCI directed its Director General (DG) to complete the investigation within 90 days.
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The order came after a complaint was filed by the Film and Television Producers’ Guild of India Ltd, which alleged that PVR INOX was misusing its market power by continuing to charge the virtual print fee (VPF) even after full digitisation of theatres.
The Guild argued that the fee, initially introduced to facilitate the transition from analog to digital cinema, had outlived its purpose and was unfairly burdening producers, particularly small and medium players.
CCI noted that PVR INOX, which controls nearly 30 per cent of multiplex screens in India, accounts for around 30 per cent of total box office revenues, and enjoys a dominant position in the relevant market of film exhibition through multiplex theatres in the country.
The competition watchdog said that PVR INOX’s decision to exempt several Hollywood studios from paying VPF while continuing to impose the charge on smaller filmmakers “prima facie appears discriminatory”.
The Commission also noted that charging VPF without offering any distinct service amounted to imposing supplementary obligations, possibly in violation of Section 4.
However, PVR INOX defended the VPF levy, saying the cost of digital cinema equipment remains high and requires replacement every 8-10 years. It argued that removing VPF would leave exhibitors with no choice but to hike ticket prices.
The DG has been directed to investigate the role of responsible officers of PVR INOX under Section 48 of the Act.
The Competition Commission of India (CCI) clarified that its observations were prima facie and not a final finding on the merits of the case.
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