1. This appeal is directed against order dated 23.06.2015 passed by the Competition Commission of India (for short, the Commission) in Case No. 45 of 2012, Kerala Cine Exhibitors Association (Respondent No. 2 herein) vs. Kerala Film Exhibitors Association (Appellant No. 1 herein) and four others under Section 27 of the Competition Act, 2002 (for short, the Act) whereby Appellant No. 1, Film Distributors Association (Kerala) (Respondent No. 3 herein) and their office bearers were directed to cease and desist from indulging in anti-competitive practices, as described in the order and penalty was imposed on the appellants and Respondent No. 3. At the outset, we consider it necessary to mention that the description of Appellant No. 1, as given in the title of the appeal, is incorrect inasmuch as the said appellant is Kerala Film Exhibitors Federation and the same has been correctly described as such in the information filed by Respondent No. 2, the investigation report, the impugned order and cover-pages of the three volumes of the paper books.

2. Appellant No. 1 and Respondent No. 2 are associations of theatre owners who are engaged in the business of exhibiting the films. Both are registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 (for short, the 1955 Act). While Appellant No. 1 has 315 members, Respondent No. 2 has 171 members. Respondent No. 3 is a trade association of film distributors in Kerala. Its main objective is to encourage and develop proper distribution of feature films in the State of Kerala and to safeguard the interest of its members. It is also registered under the 1955 Act and 221 distributors in the State of Kerala are its members. Respondent No. 4, Kerala Film Producers Association is a representative body of film producers of Malayalam films. Its main objective is to promote, aid, help, encourage and develop the production of Malayalam films. Respondent No. 5, Kerala State Chalachitra Academy is an instrumentality of the State. The Board of Directors of Respondent No. 5 comprises of well-known directors, producers, writers, artists and others from the film industry, who are nominated by the State Government along with one of its officer. Respondent No. 6 is the State of Kerala.

3. On 30.07.2012, Respondent No. 2 filed an information under Section 19(1)(a) of the Act with the allegation that Appellant No. 1 is in a dominant position in the market of exhibition of films, that it has formed a cartel with Respondent No. 3 and successfully prevented exhibition of new films in the theatres owned by its members despite the fact that they have been classified as Class A or Class B theatres as per the recommendations made by the Committee set-up by Respondent No. 5. Respondent No. 2 further alleged that abuse of dominant position by Appellant No. 1 is evinced from the fact that if the new films are released in the theatres owned by its members, then those films are not allowed to be released in the theatres owned by the members of Appellant No. 1. The precise nature of the allegation levelled by Respondent No. 2 is discernible from paragraphs 6 to 8 of the information, which are reproduced below:

"6. As a matter of fact, the presence of a distributor had lost its relevance as a result of the satellite transmission of films in theatres having digital exhibition facilities. The Film Distributors Association (Kerala) is yet another cartel formed for the purpose of controlling the industry, since producers of films by and large will prefer to entrust the distribution through the Film Distributors Association (Kerala), as they have a net work of their own in the matter of distribution. In the process, the Film Distributors Association (Kerala) is exploiting the laciness of the produces, which too had in turn resulted in formation of another cartel in the film industry by the Film Distributors Association (Kerala). As mentioned earlier, the Film Distributors Association (Kerala) is only a middle man without any investment in the film industry. In so far as the Film Distributors Association (Kerala) is concerned they are hand in glow with the Federation for the purpose of preventing the release of new releases in centers other than of their choice. It is through this course, films are not allowed to be released in large number of centers or prevented in the State which were identified by the Government as releasing centers of new films a decision arrived at after study by people, who are in the film industry.

7. It is brought to the notice of the Commission in this regard that consequent to the constitution of the three regional committees for the purpose of identifying theaters for the new release, large number of theatre owners had provided additional facilities for the theaters to be classified as A class or B class for securing the release of new films. This has been done after investing several amounts to upgrade the standard and to meet the market requirements. However, those theaters, though have been recognized by the Government as releasing centers of new release, on the basis of recommendation of the committee constituted in this regard, are not given release as a result of the threat posed by the Federation by withdrawing from exhibiting new release when films are given for release to theaters other than to the members of the Federation. This action is against the concept of competition by forming cartel by the Federation which results in abusing of dominant position enjoyed by the Federation. The action of the Federation in forming the cartel so also the Film Distributors Association (Kerala) will attract the mischief of clause 9 (b) of sub-section (3) of Section 3 of the Competition Act. Therefore, it is well within the powers of this Commission to pass orders prohibiting the Kerala Film Exhibitors Federation from withdrawing exhibition of cinemas on the ground that fresh release is allowed to others who are not members of the Kerala Film Exhibitors Federation. The Commission may also direct the Film distributors Association (Kerala) that the said Association shall not withhold the release of new films to the theaters which are demanding the fresh release and have been found eligible for the same by the State Government and that may be found in future.

8. The making of a cinema is part of business and a fundamental right enjoyed by every citizen. The producers of the cinema have their right to exhibit their cinemas in the theaters of their choice. However, the formation of the cartel has resulted in taking away their right violating their fundamental rights as well. In view of the above, it is within the powers of this Commission to direct the Federation as well as the Distributors Association that whenever a theatre owner demands for the release of the cinema, they shall ensure that the film so demanded is allowed to be exhibited in the said theatre ignoring the resistance from the 1st respondent Federation and the dictates of the 2nd respondent Film Distributors Association (Kerala)."

4. The Commission examined the allegations contained in the information and felt satisfied that a prima facie case is made out for investigation. Accordingly, order dated 09.01.2013 was passed under Section 26(1) of the Act and the Director General (DG) was asked to conduct an investigation in to the matter.

5. The Additional Director General (Addl. DG), to whom the case was entrusted by the DG, issued notices to Appellant No. 1, Respondents Nos. 2 to 4 and others under Section 36(2) read with Section 41(2) of the Act requiring them to furnish the specified information and documents. He also issued summons to S/Shri P.V. Basheer (Appellant No. 2), President of Appellant No. 1, Siyad Koker (Appellant No. 3), President of Respondent No. 3, G. Suresh Kumar, President of Respondent No. 4, Rajendran Nair and Secretary of Respondent No. 5 and recorded their statements. In addition to this, the Addl. DG received the affidavits of S/Shri K.J. Antony, M.M. Hamsa, K.A. Jaleel, G. Suresh Kumar and Shaji Vishwanathan and the following documents filed by Respondents Nos. 2 and 5 and others:

"1. A translated transcript of TV Reports on the issue of wide release of movies during Onam festival (IP) and media report transcription. Hindu daily clipping dt. 16 Sep. 2014.

2. List of KFEF theatres where films Chattakari, Mayabazar & Kurukshetra.

3. List of total theatres in Kerala

4. List of 48 releasing centres/stations.

5. Reply of FDA (K) dated 19.01.2015 & affidavit dt. 29.1.2015.

6. Vital documentary evidence produced by Kerala State Chalachitra Academy

Exhibit 3 - circular dt. 08.02.2008 issued by General Secretary KFEF (OP1) to its members.

Exhibit 4 - Letter of Deepa

7. KCEA dt. 11.11.2014 & 18.12.2014.

8. Letter dt. 12 Aug. 2013 received from IP containing undertaking submitted by various theaters.

9. 2006 agreement between OP1, OP2 & OP3.

10. 2008 agreement between OP1, OP2 & OP3."

6. In the course of investigation, the Addl. DG issued several probe letters and gave opportunity to Appellant No. 1 to clarify its position qua adverse material and circumstances and also produce evidence to support its plea against cartelization and abuse of dominant position. The details of the probe letters issued by the Addl. DG and responses received from Appellant No. 1 are as under:

7. After undertaking the aforesaid exercise, the Addl. DG analysed the documents received by him, the statements made by Appellant Nos. 2 and 3 and others, affidavits of S/Shri K.J. Antony, M.M. Hamsa, K.A. Jaleel, G. Suresh Kumar and Shaji Vishwanathanand submitted report dated 03.02.2015 with the finding that the Appellant No. 1 and Respondent No. 3 have acted in violation of Section 3(3)(b) of the Act. The report of the Addl. DG is divided in the following eight chapters:

8. In Chapter 4 of the report, the Addl. DG formulated the following issues of fact:

"(1) Whether the members of KCEA (IP) have been denied new release of movies in its theatre

(1) (b) Whether certain films or producers have been banned from display in theatres of KFEF (OP-1) due to display of their movies in theatres of KCEA (IP)

(1)(c) Whether Producers/distributors are prohibited from release of movies in the theatres of KCEA (IP)

(2) Whether the conduct of OP-1 is violative of the provisions of section 3(3) and other provisions of the Act/

(3) Whether the other OPs, that is OP-1, OP-2, OP-3 are violating the provisions of section 3 Competition Act 2002"

9. While dealing with Issues Nos. (1), (1)(b) and (1)(c), the Addl. DG referred to the evidence produced by parties, the statement made by those to whom summons were issued under Section 36(2) read with Section 41(2), affidavits of S/Shri K.J. Antony, M.M. Hamsa, K.A. Jaleel, G. Suresh Kumar and Shaji Vishwanathan and recorded unequivocal findings that the members of Respondent No. 2 have been denied new release of movies in their theatres; that certain films or producers have been banned from displaying the movies in the theatres of the members of the Appellant No. 1 because they displayed their movies in the theatres owned by the members of Respondent No. 2. The Addl. DG also held that the producers and distributors are prevented from releasing movies in the theatres of the members of Respondent No. 2.

10. The procedure adopted by the Addl. DG in this case shows that he fully complied with the principles of natural justice and gave ample opportunity to Appellant No. 1 and Respondent No. 3 to clarify their position and controvert the evidence produced/received against them. All this is evident from the following extracts of the report of the Addl. DG:

"4.5 Issue 1(a) : Denial of new movies in the theatres of IP

4.5.1 Evidence of members theatres not getting fresh release

(i) The IP was required to submit evidence to substantiate its claim that its member theatres have not been given fresh releases by distributors. It has submitted vide letter dated 12.08.2013 undertakings from various theatre owners (members of KCEA) who are eligible to get release of the film as per the norms of fresh releases, as formulated by the Government of Kerala, but are not getting fresh releases. This has been examined and the relevant list of some of the aggrieved theatres is as below. The gist of their submission is also given. The parties have submitted that despite having necessary infrastructure and appropriate grading as per the Government Committee appointed under Kerala Chalchitra Academy, because of prohibition on fresh release to them by OP-1, they are not getting fresh releases/new movies. The copies of these letters are at annexure-15.

4.5.2 Evidence collected from the members of I.P.

4.5.3 It is apparent from the submissions that despite having necessary infrastructure and appropriate grading from the Government Committee appointed under the Kerala Chalchitra Academy, they are not getting fresh release/new movies. This is so as OP-1 boycotts the movies in the theatre of its members, if its release in KCEA (IP) theatres. It is further brought out in these letters/undertakings that this is repeatedly resulting in revenue loss to these theatres, to the producers who are not getting wide release and the inconvenience to the general public who have to travel long distance to watch fresh releases.

4.5.4 Reply of OP 1 to the aforesaid allegations

The OP1 was confronted with the aforesaid allegations and allowed to submit its stands vis--vis the allegations. In this regard summons were issued and a statement on oath of Shri Basheer Ahmed, President of Kerala Film Exhibitors Associations (KFEF) (OP1) was recorded on 20.10.2014. Shri Basheer Ahmed was questioned vide Question No. 6 of the statement (Statement at Annexure S-4). In this response he stated that as per an agreement between KFEF (OP1), FDAK (OP2) and KFPA (OP3) the new movies are to be released only in the agreed release centres and further those theatres which do not have modern facilities like AC, DTS, cafeterias, toilets. Are not to be given new releases.

4.5.5 The aforesaid statement of Shri Basheer Ahmed has been considered but is found to be factually incorrect. Many theatres of KCEA (IP) have modern facilities as per classifications report of Government Committee under the Kerala Chalachitra Academy and yet do not get fresh release. This has also been highlighted earlier in their undertakings given by the various theatre owners and also as per the classification report submitted by Kerala Chalachitra Academy. While many theatres of OP1 allegedly do not have modern facilities and yet are getting new releases. IP has submitted the list as below:

4.5.6 Details of some theatres owners who are members of OP-1 (KFEF) and are not eligible as per the classified list of Kerala Chalachitra Academy but are getting fresh release of films.

The above clearly show that the reasoning offered by Sri P.V. Basheer Ahmed regarding KFEF prohibiting wide release on grounds of lack of infrastructure is merely an eye wash.

4.5.7 Purported agreement between OP1, OP2 and OP3 limiting release of new movies.

Shri Basheer Ahmed has also taken the plea that in a joint meeting of the three associations i.e. Kerala Film Exhibitors Federation (OP1), Film Distributors Association (OP2) and Kerala Film Producers Association (OP2) on 06.10.2008, it was decided to fix the number of released stations to 48 (i.e. centres which would release new movies). Further, as per meeting held on 25.05.2011 the release centres were extended to 70. Thus, in a nutshell Shri Basheer Ahmed has also taken the defense that wide release cannot be implemented on account of agreement between these three parties.

He has furnished a copy of the minutes of the meeting circulated vide letters dated 22.06.2006 of General Secretary of KFEF sent to General Secretary FDA(K). As per the translation submitted the total number of release stations have been increased to 45. (Annexure-16) Further, another letters dated 28.07.2006 has been furnished. This is a letter from President KFEF to the General Secretary, Kerala Film Chamber of Commerce. As per agreement dated 27.07.2006, 48 stations were to be given fresh release.

Further, another document has been submitted by KFEF which is purportedly an agreement between OP1, OP2 and OP3. As per their meeting dated 04.10.2008 as per which the release stations are to be fixed at 70 (Annexure-18). The relevant portion of translation is given below;

.... As per the decision taken in the Joint Meeting of Kerala Film Exhibitors Federation, Kerala Film Producers Association, Film Distributors Association (Kerala) comprising their office Bearers and Executive Committee Members held at Grant Hotel, Ernakulam on 04.10.2008, it was decided and fixed 70 release stations of pictures in Kerala. A joint Meeting comprising the members of above was held at Gokulam Park Hotel Conference Hall, Ernakulam on 06.12.2008 to fix the names of the 70 release stations.

Release stations are said to be the stations where fresh release are to be given. Thereby effectively the said agreement controls the supply of new Malayalam movies in the State of Kerala. Further, by excluding many stations and thus many theatres from the ambit of fresh releases, it is even limiting the supply of movies in the State of Kerala. Such an agreement would be anti-competitive and cannot be any defense for not allowing release of new movies to certain theatres.

As a result of this agreement and the conduct of OP1 in limiting new release, the following is noted:

Public at large is inconvenienced as they are not able to watch new movies or they have to travel long distances to the approved entries to watch new movies.

The members of IP(KCEA) are not getting new releases as such they are suffering loss of business/revenue losses.

The producers and the distributors are not getting wide releases as such they are suffering revenue losses.

As many theatres of Kerala (those of IP) get poor turnout of viewers who eventually watch these movies on pirated CDs, DVDs etc. the State Government would be losing its revenues of entertainment tax (as also pointed out in the report of Kerala Chalachitra Academy)

4.5.8 Additional Evidence regarding prohibition of wide release/release of new movies to theatres of IP

During the course of investigation additional evidence was furnished by Shri Shaji Viswanathan General Secretary of KCEA (IP) on personal appearance 20.09.2014. These evidences also sustainable the claim of violation of the Competition Law by the OP1. The submission furnished are briefly discussed and evidences analysed below:

4.5.9 Clipping of Hindu Newspaper regarding prohibition of wide release of movies on the occasion of Onam:-

The IP has submitted clipping of Hindu Newspaper (Kochi edition) dated 16.09.2014 where the controversy about wide release of movies on the occasion of Onam festival has been reported. The salient portion of the news report is reproduced below:-

........The wide release row is triggering a serious crisis in the Malayalam film industry. Though the row is more than seven years old, it turned conspicuous this Onam when the Kerala Film Exhibitors Federation (KFEF), representing the A class theatres, opposed and succeeded in preventing the screening of four Onam release films in "B" and "C" class theatres. President of the Kerala Film Producers Association (KFPA) G. Suresh Kumar told The Hindu that the row was denying producers huge earnings which should have otherwise come to them through B and C cinemas.

The issue is coming up for hearing before the Competition Commission of India on Friday. Mr. Suresh Kumar alleged that KFEF was virtually threatening the film producers with boycotts if B and C class theatres were covered by wide release.

It is quite apparent from the report that KFEF (OP1) was opposing vehemently the wide release of movies in theatres of B and C categories which were not its members. Further as per media report it even succeeded in doing so.

Audio transcription of news report on TV pertaining to wide release controversy

4.5.10 The issue of wide release of movies on the occasion of Onam festival was also reported and discussed on the TV channel Reporter. A translated transcript of one of such report has been submitted by the IP. This is at Annexure 1.

The following statement of Shri Basheer, President of KFEF (OP1) (also called Liberty Basheer) is relevant:

.....Reporter: At the same time Federation has threatened that they will not screen Onam movies if wide release is implemented. We are very sure that wide release will not be implemented said Federation. No producer is brave enough to implement it, threatened Liberty Basheer.

Liberty Basheer: (Film Exhibitors Federation) Nothing will happen, tomorrow only federations 303 theatres will screen Onam movies, Nobody will give any movie to any other theatres. In no way will wide release be allowed.

The sum and substance of this report is that KFEF is totally against the wide release of movies to theatres other than members of federation and if it was to be allowed then OP1 would not allow the screening of movies in the theatre of members of OP1.

Sri Basheer Ahmed was asked about the aforesaid allegation vide Question No. 10 in his statement of oath. He has tried to justify the conduct by taking the stand of there being an agreement to release the movies in theatres having necessary infrastructure. It has already been discussed that this argument is not tenable in law.

Affidavit of Shri Shaji Vishwanathan, General Secretary (IP)

4.5.11 Shri Viswanatha, General Secretary KCEA (IP) has filed an affidavit with this office dt. 11.11.2014 (annexure 14). In this affidavit he has stated that recently three movies, released in Kerala were not given fresh release to the theatres of KCEA. These were given for release to its members theatre months after their being released in KFEF (OP1) theatres. The particulars of movies are as below:

(i) Bangalore Days: Given to KCEA members after two months of fresh release.

(ii) How old are you: Given to KCEA members after three months of fresh release.

(iii) Drishyam : Given to KCEA members after four months of fresh release.

4.5.12 Submission of OP1 regarding delayed release of the above three movies in KCEA theatres:-

OP1 was given opportunity to submit its reply regarding delayed release of above three movies in the KCEA theatres. In this regard show cause letter/probe dated 22.12.2014 was issued (by fax & speed post) this was responded to vide reply dated 24.12.2014. The relevant portion of reply is as below:-

....The delay for release of movies, Bangalore Days, How old are you and Dhrisyam. We have no control over the Producers or the Distributors of the movies, regarding the release of their pictures. It is fully the discretion of the Producers and Distributors to fix the release dates.

It is seen that Shri Basheer Ahmed in the aforesaid reply has merely stated that KFEF has no control over the producers/distributors regarding the release of movies. This statement is factually and totally incorrect, affidavits have been furnished by President of Kerala Film Distributors Association (OP2) (Annexure-10) and by President of Kerala Film Producers, Association (OP3) (Annexure-12 and Annexure-13) (discussed in detail later in this report) stating that OP1 is not allowing the wide release of the movies and if any distributors/producers tries to release movies in the theatres of non-members of KFEF than its movie is not displayed/ban in the theatres of KFEF.

Conclusion: In view of evidence as discussed above, it is quite clear that OP-1 by its cartelized conduct, has not allowed release of new movies in the theatres of the members of IP as such the allegation raised vide Issue: 1(a) stands confirmed.

4.6 Issue 1(b): Ban on movies/producers in theatres of OP (KFEF)

4.6.1 The IP has also alleged that if any producer/distributor releases new movies in the theatres of IP then the OP-1 bans the movie in its members and at time even the future movies of the producer.

(ii) Details of films that were boycotted/banned by OP-1 allowing the fresh release in theatres of KCEA members is given below as per submissions made by the producer/distributor (enclosed along with letter dated 12.08.2013 of IP-1):

4.6.2 Reply of OP1 regarding the aforesaid allegation Shri Basheer Ahmed, President of KFEF (OP1) in his statement on oath dated 20.10.2014 was questioned about the aforesaid allegation and allowed opportunity to furnish evidence to support his claim if any. The relevant question and answer of his reply is given below:-

Q. 20 Informant has submitted a letter dated 03.07.2012 of S K Films wherein it is mentioned that KFEF has banned new release in theatres other than those approved by KFEF therefore S K Films denied the release of its film Raasaleela to the members of KFEF. What do you have saying regarding this

Ans. I want to say that the movie Raasaleela was released in the theatres of non members of KFEF also. I do not have any evidence regarding the same. I do not remember the name of any theatre of non member of KFEF where the said movie released.

4.6.3 Shri Basheer Ahmed did not produce any evidence to substantiate the above fact. He was given another opportunity vide query/probe letter dated 29.12.2014 to explain on his stand on the allegation. Reply dated 06.01.2015 letter No. KFEF No. 211/2014-15 has been received.

....KFEF has never boycotted or denied the release or Exhibition of the film Mahatma Ayyankali and Rasaleela (a sex picture). As per the advise from Ex-Minister Mr. Balakrishnapilla, we recommend our members to corporate screen the picture Mahatma "Ayyankali according to the date available. Even though we recommended our members, the film did not do good in the collection where it was released.

4.6.4 It is seen that Shri Basheer Ahmed has merely denied banning of the aforesaid movies, however he has not furnished any evidence or named any theatres of KFEF in which the aforesaid movies were displayed. Further, he has taken different stands on separate occasions. While in the statement on oath Question No. 20 he has stated that the movie was released in the theatres of non members of KFEF has not given any reason as to why it was not displayed in the theatres of OP1. In his written reply he has stated that the film was not boycotted by the KFEF but the members of KFEF did not display it because of it not showing good collection. However, Shri Bhaseer Ahmed has not furnished any documentary evidence to show that the film was allowed to be released in the theatres of any of the members of KFEF.

4.6.5 Ban on Vishwaroopam by KFEF

Vide affidavit dated 02.12.2014 the General Secretary of IP has also alleged that the famous film Vishwaroopam (Kamal Hassan starrer) which was released by Rajkamal Film International was not allowed to be displayed in the theatres of KFEF (OP-1) just because Shri Kamal Hassan and Rajkamal Films had agreed to simultaneously release the movies all over Kerala and also agreed to give it to the members of KCEA (IP). It also stated that eventually Shri Kamal Hassan also could not succeed in breaking this cartel and display his movies in the theatres of KFEF (OP-1) members. It was only displayed in the theatres of KCEA (IP). Documentary evidence, which include media reports have been furnished to substantiate this. Further the above facts have also been confirmed by President of OP-2, President of OP-3, reply of Kerala Chalchitra Academy, reply of State Government of Kerala and by M/s. Raj Kamal Films Ltd. and is discussed in detail as below.

(a) Confirmation of this allegation by Kerala Chalachitra Academy

The Kerala Chalachitra Academy was issued a probe letter. It has submitted its reply dated 30.4.2013 in which the aforesaid fact has been reiterated and emphatically highlighted. The relevant portion of the reply is as below:

"....In one particular case the movie Vishwaroopam of Shri Kamal Hassan, most famous South Indian Director, Producer actor was to be released simultaneously in all Cinema halls. The Cinema Halls belonging to Kerala Cine Exhibitors Association advanced money to Shri Kamal Hassan for the same. The film was boycotted by the Federation and all its members withdrew from screening that movie. Even, Shri Kamal Hassan could not avert the wrath of the Federation."

(b) Submission of State Government

A probe letter was issued to the state government in response to which reply dated 13.11.2013 has been received from the Additional Secretary to the Government of Kerala. The State Government has also cited the above facts and confirmed the same vide its reply. It has already stated that the film Vishwaroopam was not displayed in the theatres of members of KFEF (OP-1) as it was agreed to the released to theatres of KCEA (IP).

(c) Statement of Shri G. Suresh Kumar confirming the allegation

Summons were issued to Shri G. Suresh Kumar, President of Film Producers Association (OP-4). In the statement of oath (dated 16.10.2014), Annexure S-3, Shri G. Suresh Kumar, has also categorically stated (suo-moto) in response to Question 11 that apart from his own film Chattakkari, KFEF has banned Kurukshetra, Maya Bazar and Kama Hassans movie Vishwaroopam. The relevant portion of his statement is reproduced below:

"Q. 11. Has KFEF banned any of your movie

Ans. Yes, KFEF has banned my movies "Chattakari" in 2012 as I was trying to wide release the movie. Similarly, KFEF has done with "Kurukshetra", "Mayabazar" in 2008 and Kamala Hassans film "Vishwaroopam" in 2012.

(d) Affidavit of Shri Shaji Vishwanathan

Shri Shaji Vishwanathan, General Secretary, KCEA, IP has furnished his affidavit and oath dated 02.12.2014 where he was categorically stated that the movie "Vishwaroopam" was released in the theatres of IP. However, it was not released in any of the theatres of KFEF. This is so as Mr. Kamal Hassan had not agreed to the demand of KFEF for not giving wide release of the movie even in the theatres of IP.

(e) Evidence from media reports

A media report of the newspaper Hindu dated 26.01.2013 has also been enclosed alongwith the affidavit of Shri Shaji Vishwanathan which also confirmed the aforesaid allegation. It reads as follows:

Kochi Edition The Hindu dated 26.01.2013 (Annexure 18)

....... Renowned actor Kamal Hassans Vishwaroopam overcame threats from Muslim organisations and boycott by owners of A class theatres to receive an enthusiastic response in multiplexes and other cinemas that released the controversial movie on Friday.

Meanwhile, P.V. Basheer Ahamed, president of the federation, reiterated the decision not to screen Vishwaroopam in A class cinemas. "We had asked the actor not to go for a wide release, as it would have affected our collections. The actor had also decided that the movie will be released on the DTH platform after the first week of theatre release. This was unacceptable to us", he said.

(f) Statement on oath of Shri Siyad Koker, President OP2 Summons were issued to Shri Siyad Koker, President of Kerala Film Distributors Association (OP-2). Even, Shri Siyaad Koker President of (OP2) in his statement of oath dated 14.10.2014 (Annexure S-2) has suo-moto stated that the film Vishwaroopam was not displayed in the theatres of KFEF. The relevant portion of his statement is reproduced below:

Que 6 How many of the movies you had distributed within a year

Ans. Within a year, we distributed around more than 500 movies. In last year (2013) 175 Malayalam films and rest are Tamil, Hindi and English have been released. Initially we have to release the new films in KFEF theatres only and after that we can supply the movies to the theatres of the members of Informant party i.e. Kerala Cine Exhibition Association. We are bound to do so as after investing so much money to produce a film, we have to accept the terms and conditions of KFEF for releasing our invested money as they are holding the major number of theatres. Mr. Kamal Hasan actor, producer and director of the movie Vishwaroopam decided to have an all India release of his movie Vishwaroopam simultaneously in all possible theatres. This meant that there would be wide release of the movie in Kerala also. The Federation (KFEF) opposed this move and wanted to release only in the theatres of its members. Mr. Kamala Hasan did not agree to this as he had promised all India release as such this movie could not be released in KFEF theatres in Kerala and could release in other theatres which are not members of KFEF. Because of which he incurred heavy losses. This was only because of restriction placed by KFEF.

(g) Submission of Shri Basheer Ahmed, President OP1 Shri Basheer Ahmed, President, KFEF (OP1) was given an opportunity of hearing. In the statement on oath recorded on 20.10.2014 (Annexure S-4) vide Question 7, he was asked regarding Vishwaroopam not being released in the theatres of KFEF. To this he has only stated that the above movie was not banned. The relevant question and its reply is reproduced below:

Que 7 It has been alleged by G Suresh Kumar, President of OP-3 in his statement recorded on oath on 16.01.2014 which is being shown to you, that the film Vishwaroopam produced by Kamal Hassan has not been released in the theatres of KFEF because of strong opposition from KFEF

Ans. We have not banned the above said movie. This movie contain some sensitive scene therefore we all the theatre to exhibit the movie those want to exhibit the same. There was no restrictive direction issued by the KFEF.

Shri Basheer Ahmed was against given an opportunity of hearing, vide show cause letter dated 03.11.2014 vide which he was given opportunity to furnish evidence to establish that the above movie was not banned by KFEF. In response to the same replied dated 15.12.2014 has been received the relevant portion which is given below:

.....Vishwaroopam no evidence. The film Vishwaroopam not released our Kerala Film Exhibitors Federation Theatre because the film subject was communal, release stations are attacked in Kerala.

From the aforesaid replies it is seen that Shri Basheer Ahmed has confirmed that the film was not displayed in KFEF theatres. But he took a different plea from the one given in his statement. He said that this was done so because of communal tensions. The above plea is also an eyewash as evident from the media report of the Hindu dated 26.01.2013 (cited earlier) (Annexure 18) which has quoted Shri Basheer Ahmed who stated that the film was not released in A class (KFEF theatres) as Shri Kamal Hassan had not accepted KFEF demand of not going for wide release which would have affected KFEF theatres collection.

(h) Confirmation from M/s. Raaj Kamal Films

Shri Kamal Hassan was also written to confirm the aforesaid issue i.e. non-display of movie Vishwaroopam in the theatres of KFEF. In this regard a letter was received from Shri Kamal Hassan dated nil on 25.11.2014 where he only sated the following, "my film Vishwaroopam was not banned in Kerala. I also do not have any evidence to show that Kerala Film Exhibitors had refused to exhibit his film."

This reply did not throw any light on the allegation. It is clear that the film was surely not banned in the entire State of Kerala as it was indeed displayed in theatres of IP. However, the aforesaid letter did not clarify whether not the movie Vishwaroopam was displayed in the theatres of KFEF and if not what was the reason for the same. As such a detailed probe letter dated 24.12.2014 was again issued to M/s. Raajkamal Film International. In this letter it was asked to categorically state whether the film Vishwaroopam was displayed in the theatres of KFEF.

In this regard a detailed letter from Shri Chandra Hassan, partner in M/s. Raajkamal Film International dated 22.01.2015 has been received. The relevant portion of which are given below and which fully explains the circumstances leading to non-display of movie in the theatres of KFEF.

".... The film Vishwaroopam directed by Shri Kamal Hassan was released in 82 screens in Kerala on 25.01.2012. As regards exhibition of the film Vishwaroopam in the theatres of the members of Kerala Film Exhibitors Federation, you may kindly note that in the state of Kerala, as stated in your letter, there are two associations viz. Kerala Film Exhibitors Federation (KFEF) and Kerala Cine Exhibitors Association (KCEA).

During the initial troubles associated with the release of the film Vishwaroopam in Tamil Nadu, we had been unable to enter into an understanding for release of the film in the theatres of the members of KFEF. As the matters were still under discussion, it cannot be stated that there was a denial or refusal at that stage by KFEF to exhibit the film in the theatres of their members.

Raajkamal Films International had however proceeded to enter into arrangements with the members of KCEA (sometime in late December/early January 2013) for the release of the film in Kerala.

Immediately after entering into the arrangements for release in Kerala through members of KCEA, the issues in Tamil Nadu were resolved. Thereafter, on or about 10.01.2013, KFEF approached Raajkamal Films International for release of the film Vishwaroopam in the theatres of their members. They however took a position that if an arrangement is arrived at, it should be an exclusive release in the theatres of the members to the exclusive of the theatres of the members of KCEA.

However, since we did not want to deny the release of the film Vishwaroopam to the members of KCEA and had already entered into arrangements with the members of KCEA, we conveyed that we would not be in a position to offer to release the movie exclusively through the members of KFEF.

The above interactions with KFEF occurred only orally and we do not have any written record in respect thereof.

Conclusion regarding the allegation of ban on Vishwaroopam by KFEF.

Considering the aforesaid submissions, affidavit on oath of Presidents of OP-2 and OP-3, news clipping of Hindu and the reply of M/s. Raaj Kamal Film International, it is apparent that the film Vishwaroopam was not displayed in the theatres of KFEF and the reason of the same was that KFEF and its members wanted to display the movie only in their theatres exclusively and not in the theatres of members of KCEA (IP). Quite clearly the allegation as levelled by the IP, and reiterated by OP2, OP3, OP4 and OP5 stands confirmed.

4.6.6 Banning of movie "Loomier Brothers by OP1 as it was proposed to display in the theatres of members of KCEA 4.6.6.1 The IP has furnished along with his application before the commission (filed on 30.07.2012) a copy of affidavit of Shri K J Antony a film producer, whose film Loomier Brothers, was banned from display in KFEF theatres due to proposed wide release. The affidavit is at annexure 2 and its contents in brief are summarized below:

Shri K.J. Antony is the Executive Producer of Malayalam film Loomier Brothers of V.M.R.P. Productions. This film got Central Board of Film Certification on 16.03.2012 and was scheduled to have wide release in all A and B class theatres in the state of Kerala having the facility of fresh release. On coming to know that the film is scheduled to release in theatres of KFEF. As a result substantial financial losses was incurred by the producer because of cartel formed by the members of KFEF.

The deponent Shri K.J. Antony has also stated in the affidavit that he was ready to give this evidence in any query conducted by the Competition Commission, accordingly a summon dated 01.12.2014 was issued from this office requiring Mr. K.J. Antonys personal appearance. However, he intimated by his fax message dated 05.12.2014 (placed on record) that on account of acute physical illness of his father hospitalized in ICU, he would not be able to come to depose. Accordingly, vide letter dated 10.12.2014 he was asked to provide further evidence/information on an affidavit. In this regard he has submitted an affidavit on oath dated 11.12.2014 Annexure - 3 (original placed on record). The relevant portion of which are reproduced below:

....... It is submitted that I was the production Controller of the Malayalam film Loomier Brothers, which has produced by M/s. V.M.R.P. Productions, Nilambur of which my brother in law Shri K.T. Devasya is the proprietor. True copy of the certificate dated 16.03.2012 is produced herewith marked as Annexure - 1.

The film was proposed to be released to many centres in Kerala, one among them being M/s. Ganam Movie House, Kattanam, Kollam" which happened to be a member of the Keerala Cine Exhibitors Association. Being angered over the said fact, the Kerala Film Exhibitors Federation refused to release the film at any of their centres and further "banned" any film of M/s. V.M.R.P. Productions from being exhibited at any of the theatres of the Federation.

In a bid to resolve the dispute, the deponent, the director of the film Shri Madhu Thatthampilly and Shri Hari G.s. (cine artist) approached the Kerala Film Exhibitors Federation at their office situated at Ernakulam who informed them that they stood "banned" from exhibiting their films at theatres affiliated to the Federation. Under such circumstances, the deponent, Shri Madhu Thattampily and Shri Hari G.S. approached the Manager of Pranavam Theatre (affiliated to the Federation) at Kollam Shri Rajashekhran Nair who also confirmed the incident of banning the film as well as any other film production of M/s. V.M.R.P. Productions and Shri K.T. Devasya. The deponent was able to videographe meeting and has transferred the same to a Compact Disc which is enclosed along with this affidavit.

4.6.6.2 Thus it is apparent that the cartelization of OP1 has resulted in banning of the movie. Accordingly, in the statement of Shri Basheer Ahmed, President of KFEF recorded on 20.10.2014 (annexure S-4), he was asked to explain if KFEF has passed any resolution or direction not to exhibit the film in theatres of its members (Question 5).

In his reply Shri Basheer Ahmed has merely stated that no such direction was passed.

However, no evidence whatsoever could be produced or were submitted subsequently during the course of investigation to show that the film Loomier Brothers was released in any of the theaters of the members of KFEF. As such the allegation of banning of Loomier Brother stands confirmed.

Conclusion: It is evident that the cartel of OOP-1 has not allowed display of movies/banned movies, which were released in the theatres of members of IP and the allegation as described in issue 1(b) stands confirmed.

Issue 1(c): Prohibition of Producers/Distributors from giving fresh releases to IP

4.7.1 Deposition of parties (Distributors/Producers) alleged not to have given fresh releases to IP

The IP vide its reply to the IO vide its letter dated 12.08.2013 has also alleged that there are certain producers/distributors who are not given fresh releases to the member of KCEA since 2009. It has furnished a list of four such entities which are as below:

1. M.M. Hamsa

Kala Sangham Films, Kottayam

2. K.A. Jaleel

Galaxy Multi Media, Ernakulam

3. P. Sreekumar,

Remya Moviews, Palakkad

4. Anto

Play house, Ernakulam

In order to verify the claim of IP notices were issued to three parties to confirm whether they were giving fresh releases to the members of KCEA and if not why were they are not giving fresh releases. In this regard reply of the following two parties has been received which is discussed below while the other two parties have not responded.

4.7.2 Reply of Shri M.M. Hamsa, Kala Sangham Films, Kottayam

Shri M.M. Hamsa is alleged not to have given any fresh releases to the members of KCEA. He has furnished an affidavit dated 09.01.2014 vide which he has stated that he has distributed only one film named Janapriyan since 2009 which was not given to the members of KCEA as there the theatres are not up-to-date and he does not want to waste money invested in the film.

However, the aforesaid is not factually correct as many theatres of IP have been categorized A and B by the Kerala Chalchitra Academy after inspection and were certified fit for fresh releases. Shri Hamsa has submitted another affidavit suo-moto to his office dated 09.01.2015 Annexure - 4 where he has reiterated and further explained that he could not release his film in small towns, owing to the budget constraint etc. But he has also added the following vital point which is as below:

"..... moreover we are restricted by the Kerala Film Exhibitors Federation in supplying the move to the members of Kerala Cine Exhibitors Association which is conveyed to you by our Film Distributors Association (Kerala) during the time of investigation of this case."

Thus, the affidavit of Shri Hamsa makes it very clear that he failed to give fresh release of his movie not merely because of financial considerations, but because of restriction placed by the KFEF (OP1) on the distributors/producers to release new movies to the members of KCEA (IP).

4.7.3 Submission of Shri K.A. Jaleel

Shri K.A. Jaleel, M/s. Galaxy Multi Media was given a notice as discussed above. In response to which it has furnished an affidavit dated 09.01.2015 Annexure - 5 (original place on record) where in the following has been stated ............ Please note that we are unable to permit the fresh release of film to the Kerala Film Exhibitors Association as we were given instruction from Kerala Film Exhibitors Association as we were given instruction from Kerala Film Exhibitors Federation."

4.7.4 It is quite apparent from the affidavits above that the films are not being released to the members of KCEA only at the instances/instructions of KFEF (OP1). Regarding above allegation OP1 was given an opportunity of hearing vide letter dated 29.12.2014 of this office, wherein it was asked to explain the reasons regarding non supply of fresh releases by the above parties to the members of IP under pressure from IP1. In response to the same reply dated 06.01.2015 from Shri Basheer Ahmed, President of OP1 has been received. As per which Shri Basheer Ahmed has denied that KFEF is putting any influence on release of movies by the producers/distributors the relevant reply is below:

"...... It has been alleged by the Kerala Cine Exhibitors Association (KCFA) that some of the following producers and distributors are not giving fresh releases to the members of KCEA.

The release date of the pictures is vested in the Producers and Distributors and Federation has no voice in fixing the release dates. The Distributor fix the release date and releases in theatres recording of their wish KFEF will not interfere in any of the releases. As far as Federation is concerned M.M. Hamsa (Kalasangam, Kottayam), P. Sreekumar (Remya movies, Palakkad) K.A. Jaleel (Galaxi-Multi-Media, EKM) Anto Jose (Play House, EKM) is having good relation with Federation members and we are screening their pictures without any problem. No members has any disputes with the above distributors."

4.7.5 It is seen that Shri Basheer Ahmed has furnished no documentary evidences to refute the allegations. He has merely made a denial. But has not furnished any list of theatres or any theatres where the movies of these distributors/producers is released and which is member of KCEA (IP). On the contrary the statements of Shri M.M. Hamsa on sworn affidavit dated 09.01.2015 and Shri K.A. Jaleel affidavit dated 09.01.2015 clearly confirm that they are unable to provide fresh releases to IP members because of pressure and instructions from KFEF.

4.7.6 Statement on oath of Film Distributors Association - President

In the statement on oath 14.10.2014 (Annexure 8) Shri Siyad Koker, President of Film Producers Association has categorically stated that distributors are unable to provide new movies to the theatres of IP and first release has to be given to theatres of IP (refer Question No. 6) of the statement as below:

Q. 6 How many of the movies you have distributed within a year

Ans. Within a year, we distributed around more than 500 movies. In last year (2013) 175 Malayalam films and rest are Tamil, Hindi and English have been released. Initially we have to release the new films in KFEF theatres only and after that we can supply the movies to the theatres of the members of Informant party i.e. Kerala Cine Exhibition Association. We are bound to do so as after investing so much money to produce a film, we have to accept the terms and conditions of KFEF for releasing our invested money as they are holding the major number of theatres. Mr. Kamal Hasan actor, producer and director of the movie Vishwaroopam decided to have an all India release of his movie Vishwaroopam simultaneously in all possible theatres. This meant that there would be wide release of the movie in Kerala also. The Federation (KFEF) opposed this move and wanted to release only in the theatres of its members. Mr. Kamala Hasan did not agree to this as he had promised all India release as such this movie could not be released in KFEF theatres in Kerala and could release in other theatres which are not members of KFEF. Because of which he incurred heavy losses. This was only because of restriction placed by KFEF.

4.7.7 Statement on oath of President Film Producers Association (Annexure 11)

Shri G. Suresh Kumar, President, KFPA (OP-3) has also stated that producers are not free to release the movies to IP. The relevant reply is as below:

Q. 7. Are you free for releasing your movies in theatre of members of KFEF and members of Kerala Cine Exhibitors Association (KCEA)

Ans. No, we can release our movies only with the members of KFEF (73 centres). We cannot release our movies in the theatres of KCEA even if, they are eligible to exhibit the movies as per the state rules and regulation.

Conclusion: From the evidences discussed above, it can be seen that OP-1 is prohibiting the distributors and producer from releasing new movies in the theatres of members of IP. As such, the issue - 3 of investigation also stands confirmed.

4.8 Additional Evidence furnished through Submission and Replies of OPs and Third parties

The President of OP-2, President of OP-3 were summoned during the investigation and statement recorded. Additional evidence on affidavit and through submissions have been furnished by them and also by OP-4 and OP-5 which throw light on all the issues of investigation as crystallized earlier and have significant bearing on the findings. These are discussed below.

Submission of Film Distributors Association (Kerala) (OP-2)

4.8.1 Film Distributors Association (Kerala) has been named as OP-2 in the complaint filed by IP. It is an association of Film Distributors in the state of Kerala and there are no others association whose member are dealing with distribution of Films.

4.8.2 Several notices and reminders were issued to Film Distributors Association (Kerala) (OP-2) dated 21.02.2013 to 13.06.2013. However, they were either not replied or received back marked as unclaimed. The probe letter was finally served through affixture through the office of District Collector and DM, Ernakulam. However, it was not responded a copy of the probe letter dated 21.02.2013 was again handed over to the existing President of Film Distributors Association (Kerala) Shri Siyad Koker on 06.04.2014 who was called on for discussion at DGs Office in connection with another case. Subsequently, replies were furnished by OP-2 vide their letter dated 15.05.2014 along with its bylaws certificate of incorporation and other documents.

Summons to the President of Film Distributors Association (Kerala)

4.8.3 Summon u/s. 36(2) read with section 41(2) of the Act, was issued. In response to which Shri Siyad Koker, President of Film Distributors Association (Kerala) appeared on 14.10.2014 and his statement on oath was recorded. Inter-alia other queries he was also asked about the allegation of IP whether, new releases are being given to the members of KCEA (IP) and the role and relationship of KFEF (OP-1) with FDA (K) (OP-2).

4.8.4 Shri Siyad Koker in his statement on oath (Annexure 8) has denied being a part of the cartel with OP-1 but has categorically accepted that KFEF is not allowing fresh releases to the theatres which are not members of KFEF. The gist of his submission is given below:

The members of KFEF are having major number of theatres in the state of Kerala around. It does not allow the release of new movies to theatres which are not the members of KFEF and consequently it cannot give fresh releases to the members of KCEA (IP).

KFEF (OP1) has issued letters asking FDA (K) (OP2) not to release movies in theatres other than as agreed upon.

Even the movie of Kamal Hassan, Vishwaroopam, which wanted all Kerala release was not displayed in the theatre of KFEF (OP1) as the movie was being released to members of KCEA (OP1).

The relevant portion of his statement are given below:

Q. 4. Do you require any NOC/Clearance certificate from any Association in Kerala for distribution of films in Kerala If yes, please provide the details.

Ans. As per state rules/regulation no NOC/clearance certificate is required for distribution of films in Kerala by the FDA but Kerala Film Exhibitors Federation (KFEF) illegally insisting and compelling us to provide a list of all the theatres with whom the film is to be released. However, we have not provided any list of the theatres with whom the film is to be released to the KFEF as if we provide the same, KFEF will come to know about the name and number of the theatres/stations where movie is to be released and if there are some theatres/stations which are not members of KFEF, then KFEF are having the major number of theatre (including metropolitan towns and Municipal Corporation) with them. Presently, in Kerala there are around 530 theatres out of which 355 belongs to the members of KFEF. Hereby, I am submitting letters dated 28.10.2008, 23.06.2009 and 7.10.2010 of General Secretary of KFEF wherein the General Secretary had asked us to provide the list of release station and also want us that the mistake of not proving the list of release stations should not be repeated in future. Please refer Annexure A.

Q. 5. What relation does you Association having with (KFEF)

Ans. We are the association of film distributors and KFEF is the association of major number of theatre owners/release stations in Kerala therefore we are heavily dependent upon the co-operation of the members of KFEF. Because of its major membership of theatre owners/release station, the KFEF is illegally forcing and compelling us to obey their unethical and illegal demands like the movies should be released in their theatres/release stations approved by them only. Hereby, I am submitting letter dated 22.06.2006 of General Secretary of KFEF wherein the General Secretary has warned us not to release the pictures apart from the stations approved by the KFEF. With the same letter a list of approved theatres/release station is also provided by the General Secretary. Generally, KFEF communicates through letters and sometimes telephonically also.

Q. 6 How many of the movies you have distributed within year

Ans. Within a year, we distributed around more than 500 movies. In last year (2013) 175 Malayalam films and rest are Tamil, Hindi and English have been released. Initially we have to release the new films in KFEF theatres only and after that we can supply the movies to the theatres of the members of Informant party i.e. Kerala Cine Exhibition Association. We are bound to do so as after investing so much money to produce a film, we have to accept the terms and conditions of KFEF for releasing our invested money as they are holding the major number of theatres. Mr. Kamal Hasan actor, producer and director of the movie Vishwaroopam decided to have an all India release of his movie Vishwaroopam simultaneously in all possible theatres. This meant that there would be wide release of the movie in Kerala also. The Federation (KFEF) opposed this move and wanted to release only in the theatres of its members. Mr. Kamala Hasan did not agree to this as he had promised all India release as such this movie could not be released in KFEF theatres in Kerala and could release in other theatres which are not members of KFEF. Because of which he incurred heavy losses. This was only because of restriction placed by KFEF.

Q. 7. Do you have any document to substantiate the above fact

Ans. Right now, I am not having any document but I will submit media reports etc. later.

Q. 8. Out of those 500 films how many you have distributed to the members of KFEF and Kerala Cine Exhibitors Association (KCEA)

Ans. Out of these 500 films movies we have distributed to the member of KFEF only a few films were released in the theatres of the members of the Informant. Though, exceptionally some distributors succeed in releasing their movie in the theatres of non-members of the KFEF also. For example: The film "Kurukshetra" was released in all theatres which include non-members of the KFEF hence they insisted to return back the deposits/balance money to them before the release of the movie. Hereby, I am submitting letter dated 07.10.2008 of General Secretary of KFEF for reference. Please refer Annexure B.

Q. 9. Have your Association issued any circular regarding non-distribution or withdrawal of film "Loomier Brothers" from theatres If yes, Please submit the same.

Ans. As per my knowledge, we have not issued any circular regarding non-distribution or withdrawal of film "Loomier Brothers from theatres. No one has approached us also regarding the same.

Q. 10. Please inform why the theatres of informant has been deprived of new films, despite, they are coming under the category of A Class and B Class as per the classification made by the Committee deputed by the Government of Kerala

Ans. Though, the theatres of the Informant are coming under the category of A class and B class as per the classification made by the Committee deputed by the Government of Kerala but we were not in a position to distribute them new films as KFEF will not screen the said movie in their theatres if we do so. Our members will put into heavy financial loss in case we decide to screen the movie in the theatres of the members of the Informant. Hereby, I am submitting letter dated 28.07.2006 of President of KFEF for reference. Please refer an Annexure D.

4.8.5 From the statement of Shri Siyad Koker (Annexure - 8) and the documents which have been furnished along with the statement, it is quite clear that fresh releases are not being given to the members of IP and that is so because of the pressure from KFEF and its threats to boycott the release the movie in the theatres of its members if the new release is given in the theatres of IP. Further, the documents submitted by Shri Siyad Koker alongwith his statement on oaths (which are briefly discussed below) are also substantiating the above facts.

4.8.6 Annexure A1 to the statement on oath

This is a letter dated 28.10.2008 of General Secretary of KFEF (OP1) sent to General Secretary FDAK (OP2) asking him to release the movie only in the 70 stations as agreed upon and not to violate this in future. Relevant portions are as below:

...... The number of release stations have fixed in the Joint Meeting of Kerala Film Exhibitors Federation, Kerala Film Producers Association. Film Distributors Association (Kerala). The release of picture in more stations than 70 stations, already fixed is a clear violation of Joint decision taken. We also wish to inform you that our member, have paid advance for that picture. Although it was agreed to send us the list of Release Stations to us and till today we have not received such list.

Please do not repeat such above mistake in future. The decision taken jointly by the organizations should be all of strictly in order to maintain the good relationship in future.

Annexure A2 to the statement on oath

This is a letter dated 23.06.2009 of General Secretary of KFEF (OP1) sent to General Secretary FDAK (OP2) asking him to release the movie only in the 70 stations as agreed upon and not to violate this in future. Relevant portions are as below:

........ Recently we find that pictures are released in opposition theatres of Release Stations without touching holdover of pictures released. This is in violation of our decision taken early.

Annexure A3 to the statement on oath

This is a letter dated 07.10.2010 of General Secretary of KFEF (OP1) sent to General Secretary FDAK (OP2) asking him to release the movie only in the 70 stations as agreed upon and not to violate this in future. Relevant portions are as below:

......... As per the decision of the Joint Meeting cited above, pictures are to be released at Guruvayur or Kunnamkulam and also either at Puthur or Kottarakkara. Now we find that your members are constantly violating the above decision in releasing the picture at Kunnamkulam and Guruvayur and also Puthur and Kottarakara.

We therefore request you to follow the decision taken in our Joint Meeting very strictly, we also request you to please sent us the list of release stations of pictures as agreed by us in item No. 11 of decisions.

Letter dated 29.07.2006 of General Secretary of KFEF addressed to all members. As per this letter, fresh releases are only to be made in the approved list release/centres.

Annexure D to the statement

Shri Siyad Koker also submitted a copy of the decision taken in the Joint Meeting of KFEF (OP1), FDAK (OP2), KFP (OP3) dated 04.10.2008 as per which they have agreed to release fresh film in 70 stations.

Annexure E to the statement

This is the letter dated 22.06.2006 from General Secretary, KFEF to General Secretary, FDAK insisting of fresh release in the centers agreed upon.

4.8.7 Written submission of President of FDAK (OP-2)

The OP2 that is the Film Distributors Association was given an opportunity of hearing so as to explain the allegations of IP that it is not giving fresh release to the theatres which are members of IP. In this regard letters dated 29.12.2014 and 14.01.2015 was issued.

In response to the former, reply dated 06.01.2015 has been received. In this letter it has been stated by OP2 that there was no delay of 2 to 4 months as alleged by IP in release of pictures, Bangalore Days, How old are you, Drishyam to the members theatres of IP. Thus, it has defended its own conduct as far as release of movies to IP and its theatres is concerned. However, it has added that although some of its members are showing interest in release of the movie to the theatres of IP, the President of General Secretary of KFEF prohibits them by calling the distributor on phone and insisting not to supply the movie.

The relevant portion of the aforesaid letter is reproduced below:

.....Ongoing through the letters given by the members of Kerala Cine Exhibitors Association we noticed all the theatre owners had mentioned that Kerala Film Exhibitors Federation is not permitting them to release fresh pictures in their theatres. Even though some of our members who shown interest in giving release of these theatres, the President or General Secretary of Kerala Film Exhibitors Federation will call the Distributor over phone and insist him not to supply the said movie in the theatres mentioned in the list. If the Distributor supplied the film to the theatres mentioned in the list the Kerala Film Exhibitor Federation will not screen the said movie in their theatres throughout Kerala.

4.8.8 Reply of FDAK vide letter dated 19.01.2015

Vide this letter the President FDAK (OP2) has again reiterated its helplessness in giving fresh release to the theatres of KCEA because of threat of boycott of the movies in the theatres of KFEF. The relevant portion of the reply is highlighted below:

"...... If our members or any Distributor supply their fresh films to these theatres the Kerala Film Exhibitors Federation will not screen the fresh movies in their theatres. This decision is conveyed to us by Kerala Film Exhibitors Federation vide their letter dated 22.06.2006 which was handed over to you at the time of taking statement from us."

4.8.9 Affidavit of Shri Siyad Koker

Shri Siyad Koker, President of FDA (OP2) has suo-moto furnished an affidavit dated 28.01.2015 (Annexure 10) to this office. It is pertinent to note that this affidavit has not been furnished in response to any probe letter or any query raised from this office. Vide this affidavit it has been stated that 20 member theatres of KCEA have given an undertaking to the IP that they are not getting fresh releases. Although they are eligible for fresh release as further categorization/policy of Government of Kerala. These undertaking have forwarded by the IP to the OP2 i.e. FDA (K). In the above referred affidavit the President of FDA (K) OP2 has confirmed that the distributors are unable to supply their fresh film to these theatres because of the pressure from KFEF as the movie will be banned/not release in the KFEF member theatres if released to theatres of KCEA (IP) members is given. The salient portion of the affidavit is reproduced below:

.......... The above 20 theatres have given letters to Kerala Cine Exhibitors Association who in turn had forwarded the same to you. If our members or any distributor supply their fresh films to these theatres the Kerala Film Exhibitors Federation will not screen the fresh movies in their theatres. This decisions is conveyed to us by Kerala Film Exhibitors Federation vide their letter dated 22.06.2006 which was handed over to you at the time of taking statement from us. For your immediate reference we are forwarding a copy.

In the year 2006 the releasing stations was only 45 and later it was increased to 70 on 22.10.2008. At present of any of our member supplies the fresh movies to the theatres/stations which is not in the list of 70 the Kerala Film Exhibitors Federation will not screen the movies of the Distributors. So always our members are forced to follow the decision the Kerala Film Exhibitors Federation. Due to this practice of Kerala Film Exhibitors Federation, Kerala Cine Exhibitors Association has approached you for relief.

4.9 Submission of OP-3 Kerala Film Producers Association (KFPA)

4.9.1 OP vide its reply dated 25.05.2013 has submitted that KFPA is an Association started functioning in the year 1989 and is registered under the Travancore Cochin Literary scientific and charitable societies Act XII of 1995 with Registration No. E.R. 508/1989. The main motives of the association is to promote, aid, help, encourage and develop the Malayalam Film Productions and to watch, protect and extend the privilege of its members. It also acts as a forum for discussing and settling issues among members and other organisations of the Malayalam film industry.

4.9.2 It has stated that the association is not affiliated with any of the Opposite Parties, but had participated in many joint meeting with the OPs and Informant regarding wide release and other issues relating to film industry and also settlement of disputes. Statement of Shri G. Suresh, President of Kerala Film Producer Association (OP3) and an affidavit furnished by him.

4.9.3 Shri G. Suresh is the President of KFPA (OP3). This is the only association of Film Producers in Kerala. Summon u/s. 41(2) read with s. 36(2), was issued to him and his statement recorded on oath on 16.10.2014. In his statement (Annexure 11) he has categorically stated that producers are unable to give fresh releases of movies to the theatres of KCEA (IP) because of the pressure of KFEF. This is despite the fact that many theatres of KCEA are having modern amenities as per the classification made by the committee deputed by the Government of Kerala (Kerala Chalachitra Academy). In his statement he has further stated that the members of KFEF are not allowing new theatres to come in the business.

He has also added that the movie produced by him, Chattakkari in 2012 was banned by KFEF which also banned the movies Kurukshetra, Mayabazar (2008) and Kamal Hassan Film Vishwaroopam. Further KFEF also did not allow wide release of the films on the occasion of Onam.

4.9.4 T he statement of Shri G. Suresh is at Annexure 11. However, the relevant portions are reproduced below:-

Q. 7 Are you free for releasing your movies theatre of members of KFEF and members of Kerala Cine Exhibitors Association (KCEA)

Ans. No, we can release our movies only with the members of KFEF (73 centres). We cannot release our movies in the theatres of KCEA even if, they are eligible to exhibit the movies as per the state rules and regulation.

Q. 8 Why you cannot release your movies in the theatres of KCEA

Ans. We cannot release our movies in the theatres of KCEA because the pressure from KFEF. If we try to release our movie in the theatres of KCEA, KFEF will boycott our movie which will amount to big financial loss to us as out of the 505 theatres in Kerala, KFEF is having 303 theatres under them. Right now I am submitting the copy of the minutes of the meeting dated 04.10.2008 at Ernakulam Grand Hotel held between producers, exhibitors and distributors. Please refer Annexure A. The said minutes are in Malayalam. Later on, I will submit the true English Translation of the said minutes.

Q. 9. Please inform why the theatres of Informant has been deprived of new films, despite, they are coming under the category of A Class and B Class as per the classification made by the Committee deputed by the Government of Kerala

Ans. KCEA is deprived of releasing new films due to the pressure from the members of KFEF even if they are having all the modern amenities as per the classification made by the Committee deputed by the Government of Kerala. Not only this but also the members of the KFEF is not allowing the new theatres to come in the business.

Q. 10. How many number of theatres the Informant Association is having

Ans. There are around 200 theatres owners who are the members of the KCEA.

Q. 11. Has KFEF banned any of your movie

Ans. Yes, KFEF has banned my movies "Chattakari" in 2012 as I was trying to wide release the movie. Similarly, KFEF has done with "Kurukshetra", "Mayabazar" in 2008 and Kamala Hassans film "Vishwaroopam" in 2012.

Q. 12. Is there any other information that you want to submit

Ans. KFEF has formed a cartel because of which it is not allowing the Malayalam films to be released in the theatres which are not the members of KFEF. If anybody wants to do so then KFEF threatens that his film will not be screened in the theatres of KFEF members. The KFEF is having 303 members and is in dominant position in the Kerala Film Industry. Further, the theatres of KFEF members are in revenue yielding districts, corporations and municipalities. Further, they are largely A category theatres. As such a film cannot gain much revenue if it is not displayed in the theatres of KFEF members. Therefore, they are able to abuse this dominant position in the Kerala Film Industry and threaten us. This threatening is many times openly done as it was done during this Onam festival season when the wide release of certain movies could not be done. This also reflected in some media reports. I do not have such reports right now but I can submit them later on along with other documentary evidences to show cartelization and abuse of their position. As a result of this, in the Kerala Film Exhibitor industry, the interest of the public at large, distributors, producers as well as those exhibitors which are not the members of KFEF is suffering. Although the Kerala Government has also tried to intervene however KFEF is not ready to listen to the government also. Hence, my submission.

4.9.5 Affidavit of Shri G. Suresh

Shri G. Suresh also filed affidavit on oath dated 10.12.2014. This is at (Annexure 12). The relevant portions of affidavit is as below:

......The movie Chattakkari produced by M/s. Revathi Kalamandhir was getting ready for release on 8th June, 2012. M/s. Remya Movies, the distributors of this movie had already entered into agreement with many theatres and obtained advance for the said movie. However, it was thereafter understood from the distributors and theatres that the Kerala Film Exhibitors Federation has banned the release of the movie without intimation or notice either written or otherwise. Both of them do not know the reason for the ban. It was informed that the ban is for the reasons known only to the President of the Exhibitors Federation.

4.9.6 Shri G. Suresh Kumar further stated that the reasons for the ban of his movie could be personal enmity of Shri Basheer Ahamed, President of KFEF. Accordingly, Shri Basheer Ahamed was given an opportunity of hearing on this point vide letter dated 02.01.2015, wherein he was required to explain whether KFEF had banned the release of the movie Chattakari and if yes, the reason for the same. In response to this, Shri Basheer Ahamed has furnished a letter dated 06.01.2015 and has stated that the movie Chattakkari was released on 13.09.2012 and it was delayed because the picture did not have distributors. He also stated that this movie was screened in several theatres which are members of KFEF. A list of such 40 theatres was attached.

4.9.7 In order to verify the factual correctness of this claim that the movie was displayed in the theatres of KFEF a letter was written to Shri G. Suresh and his response was sought. His reply vide affidavit dated 21.01.2015 has been received.

As per this affidavit because of ban imposed by KFEF the film Chattakkari could not be released for 03 months and it was only after strong objections raised from all associations and organisation of film industries that the ban was eventually lifted and the film could be released after 03 months. The relevant portion of the statement as produce below (affidavit at Annexure 13):-

......I am the Proprietor/authorized person of M/s. Revathi Kalamandir. I know the facts of the case and competent to swear this affidavit.

I had filed an affidavit dated 10.01.2014 regarding the ban imposed by the Kerala Film Exhibitors Federation against the movie Chattakkari produced by M/s. Vevathi Kalamandhir. It is therefore informed to me from the office of the Director General, Competition Commission of India that the 1st opposite party, Kerala Film Exhibitors Federation has filed a counter statement in the said matter the copy of which was also sent to me. On perusal of the said reply I understood that the Kerala Film Exhibitors Federation has stated only false averments in the said reply and whatever averments raised are without any factual basis and is also misleading. I swear this affidavit only to submit my explanation in this regard.

As stated in my earlier affidavit dated 10.12.2014, we had made all arrangements to release the movie Chattakkari on 08.05.2012 (In my earlier affidavit dated 10.12.2014 the date was wrongly stated as 08.06.2012 instead of 08.05.2012) with the intention to exploit the movie during summer vacation for schools (April-May) when the family crowd come to theatres. It was when I came to know about the ban. The release date was delayed only due to the ban imposed by the Kerala Film Exhibitors Federation. There is no other reasons other than the ban to postpone the release the movie for nearly 3 months. No producer will keep his movie for three months after completion. There is absolutely no basis for averment in the reply that the release date was delayed because of the picture did not have distributors is absolutely false. In fact we have appointed distributors in two areas on commission basis to book the theatres. In all the areas all the expenses for distribution including publicity were met by us directly. Facts being so there is no merits in the averment in the reply that we did not get distributors. The movie was a big failure due to untimely release. The movie could not be released because of ban imposed by the Federation. The ban was withdrawn by the Federation after three months because of the strong objections raised from all the associations and organizations in the film industry against the illegal acts of the Federation and its President.

4.9.8 As can be seen the contention of the President of OP1 and OP3 regarding ban/delayed released of film Chattakari is contrary to each other. Neither, Shri Basheer Ahmed nor Shri G Suresh have furnished any documentary evidence to substantiate respective claims. However, it is seen that while the claim of Shri G. Suresh Kumar has been furnished vide his two affidavits Shri Basheer Ahmed has not made his claim through any sworn affidavit. He has merely issued a denial regarding there not being any ban of the movie Chattakari. Considering the above the submission made by Shri G Suresh Kumar would have greater evidentiary value.

4.9.9 Besides the above issue it is also evident from the statement of Shri G. Suresh (President OP-3) that OP-1 is not allowing the Producers to release new movies to the members of IP (Question No. 7 of the statement) and if any producer attempts to do so his movie will be banned by OP-1 (Question No. 8 of statement)

4.0.10 Evidence furnished by OP-4 (Kerala State Chalachitra Academy)

4.10.1 KSCA or OP-4 is the intermediary between the film industry and the Government. The Kerala State Chalachitra Academy was formed as a Society under the Government of Kerala in the year 1997 under the Travancore - Cochin Charitable Societies Act 1936. For development of film industry, the Central Government appointed a Sivarama Karnath Committee at national level for submission of proposals. Thus, taking cues from the report the Academy was formed in the State. It is the duty of the Academy to observe the developments/issues in the film industry and analyse the same. The main objective of the Academy is to help government in the formulation of policies connected with film and television related activities.

4.10.2 Probe letters dated 21.02.2013 and 29.12.2014 were issued to KSCA which were responded vide letters dated 26.04.2013 and 06.01.2015. Further, the statement on oath of Sri S. Rajendra Nair Secretary KSCA was also recorded on oath on 13.11.2013. The salient points of submission and the statements are discussed below.

The submission dated 26.04.2013 clearly show that KFEF (OP-1) has not been allowing the fresh release of movies in theatres of KCEA (IP). These theatres only get movies belatedly after they have been released and exhibited on theatres of KFEF (P-I). As a result they get much less audience, less revenue, suffer losses and are closing down. From 1500 theatres earlier the number has come down to nearly 500. This has affected the audience, the theatre owners and Kerala film Industry on the whole.

Even the movie Vishwaroopam of Sri Kamal Hassan who wanted all India release was boycotted by KFEF (OP-1) because it was being displayed in theatres of KCEA (IP) members.

In his submission Shri Rajendran Nair Secretary KCEA has also added that even the theatres of Kerala Film Development Council (which is an undertaking of Kerala Government) is not getting fresh releases, although it owns good quality theatres. This is only because of the fact that KFEF does not allow release of new movies in theatres other than its members.

4.10.3 It has also furnished vital documentary evidence to substantiate its points which are as below

Exhibit 3 to Submission - This is a circular dated 08.02.2008 of General Secretary KFEF (OP-1) given to its members as per which it has banned/placed sanctions against film distribution Company Pyramid Samira theatre Ltd. for not following its direction regarding not releasing movies outside the permitted list.

4.10.4 Exhibit 4 to Submission - Is letter of Deepa D Nair (IFS), its M.D. Kerala Film Development Corporation Ltd. dated 04.11.2013 addressed to Secretary Cultural affairs Govt. of Kerala which points to Cartel of KFEF prohibiting release of new movies in theatres owned by Kerala Film Development Corp. The relevant portions of the letter are as below

It may please be noted that running theatres in Kerala has become a high risk business in the present scenario. There is an organized caucus called Exhibitors Federation consisting of about 70 theatre owners that prevents release of frontline movies in theatres other than those held by this group. If any movie is released in any other theatres other than those owned by them then the release of this film shall be boycotted by this group. This has been the cause of a long existing conflict between this group and the Exhibitors Association consisting of other non-releasing theatres. It is not a wonder that the number of theatres in Kerala has plunged down from 1400 to merely 504. This is not a healthy and competitive trend.

As an example, KSFDC has a theatre named Chitarnjali in Chittor, Palakkad which has technical facilities suiting release of frontline movies. But release has not materialized here properly. In two instances when there was release of films at Chittoor theatre of KSFDC the picture ending statement showed good profit. But release has never been allowed due to lobbying.

There is a similar sidelining of KSFDC theatres at Trichur and Trivandrum. At Trivandrum, KSFDCC has made 4 theatres with world class projection (2k), 7.1 surround sound system, modern push back seats and other most modern facilities.

4.10.5 Exhibit 5 is a Circular of General Secretary KFEF (OP-1) as per which only films cleared by KFEF can be displayed in member theatres otherwise stringent action would be taken against them.

4.11 Evidence furnished by OP-5 Government of Kerala

4.11.1 The IP has also made the Government of Kerala one of the parties to the complaint i.e. OP5. Although it has not alleged complicity with OP1 and OP2 but has stated that OP5 is a necessary party. A probe letter was issued dated 02.08.2003. Vide this letter details about classification of theatres in the State of Kerala was sought. The Government of Kerala has replied vide its letter dated 13.11.2013 (reply of Additional Secretary to the Government of Kerala). It has also annexed a detailed reply in the form of report which is similar to what has furnished by Kerala Chalchitra Academy. Inter alia other points, it has confirmed the allegation of IP that KFEF is not allowing the release of new movies to theatres other than its members. Further the movie Vishwaroopam of Kamal Hassan and the movie Sound of Boot of Pyramid Saimira Theatres Ltd. was banned in theatres of KFEF.

From the submissions above it is clear that OP-1 is not allowing release of new movies to members of IP. This has also been denied to the theatres of KSFDC (a state government undertaking). Further, movies have also been banned in KFEF theatres which are offered for release to the theatres of IP."

11. In Chapter-5, Addl. DG discussed the issue of cartelisation and rejected the defence put forwarded by Appellant No. 1. The discussion on this aspect is contained in paragraph 5.1 to para 5.11 of the investigation report, which are reproduced below:

"5.1 The OP-1 is alleged to have denied IP theatres release of new movies and prohibited producers/distributors from releasing new movies. It is also alleged to have banned movies and producers which ventured to give new release specific findings on each of the investigation issues is given herewith.

5.2 Whether OP-1 denied members of IP new release in its theatres

The main allegation of KCEA (IP) is that due to cartelization of the members of OP1, the distributors and the producers are not supplying new movies for release in the theatres of KCEA. They are getting these movies after 2 to 3 months of release in the theatres of KFEF (OP1). As a result they have poor viewership, their theatres are suffering losses, public is inconvenienced and producers are not getting wide release. In this regard several documentary evidences, media reports affidavits from various parties and undertakings from the members of KCEA (IP) has been furnished which has been discussed earlier. Even in the replies of Kerala Chalachitra Academy and the Additional Secretary of the Government of Kerala, the aforesaid facts have been confirmed. In fact State Government has also alleged that its own theatres functioning within Kerala Film Development Council (KFDC) is not getting fresh release despite having very good infrastructure. Further, 3rd parties like Raajkamal Film International have also confirmed banning of its movies Vishwaroopam because of its plan to have wide release of movies in theatres of IP (KCEA).

5.3 Opportunity of hearing was given to Mr. Basheer Ahmed, to explain the stand of KFEF in his statement on oath recorded 20.10.2014 vide Question 6 he was asked about the aforesaid allegation. The reply is as below:-

Q. 6. It is alleged by the Informant that the theatres of Informant has been deprived of new films, despite, they are coming under the category of A Class and B Class as per the classification made by the Committee deputed by the Government of Kerala Please comment why is it so

Ans. As on 27.07.2006 the number of releasing stations was fixed as 48 upto 06.10.2008. This decision was taken by the Kerala Film Chamber in a joint meeting comprising of all the three association viz., KFPA, FDA(K) and KFEF. There was another joint meeting wherein the releasing stations were increased to 70 stations. Mr. Siyad Kocker president of FDAK, Mr. S.S.T. Subrayamanyam and Sh. Mohd. Anzar President of KFEF were present in the meeting. Similarly in a joint meeting convened by Chalchitra Academy on 25.05.2011. Sh. Ganesh Kumar Minister of Culture, Dr. K.S. Sri Kumar Secretary of the academy and Kerala State Film Development Federation Corporation (K.S.F.D.C.) M.D., Sh. Sajiv Parjoshi IPS and all the members (including KCEA) of the film industry have attended the meeting. It has been decided to give wide release of films with effect from 31.06.2011, in the theatres which is equipped with the modern amenities like A.C., DTS, Cafeteria, toilets and spacious parking area as per the classification made by the Committee deputed by the Government of Kerala. Accordingly on 17.05.2012 the following A.C. theatres of the KCEA were allowed to release film.

(i) Wadakancherry-Thalam New Ragam (Independent)

(ii) Vetturoad Harisreeki Kadinamkulam Karthika, "V" TrackiKazhakootum Krishna (These centers as one Centre)

(iii) Thiruvalla Chilanka Oyoor N.V.V. Pkoothattukulam V. Cinema

The other theatre of the members of the KCEA (approximately 82 theatres) were already been allowed to release new films. So we deny the above allegation made by the Informant.

5.4 Legal Tenability of the defense of OP-1

As it can be seen that Shri Basheer Ahmed has taken the plea that wide release can only be given in theatres having modern amenities like AC, DTC, Cafeterias, toilet, spacious parking etc. as per classification done by Kerala Chalachitra Academy/Community deputed by Government of Kerala. However, it is noted that Shri Basheer Ahmed and OP1 are not allowing fresh release even in those theatres of IP association which have all the facilities including DTS etc. and which have categorized as A class or fit for new release by the committee of State Government. These have been discussed earlier and undertaking from such theatres have also been furnished. Further, the President of the Film Distributor Association (OP2), Shri Siyad Koker has himself accepted that they are unable to give wide release to any of the members of KCEA/non-members of KFEF (OP1) due to threats of boycott of the movie from the members of KFEF. Clearly, in the light of various evidences affidavit etc. The stand taken by Shri Basheer Ahmed that theatres are denied fresh releases only on the ground of lack of infrastructure is absolutely incorrect.

5.5 Purported agreement between OP1, OP2 and OP3 limiting release of new movies

Shri Basheer Ahmed has also taken the plea that in a joint meeting three associations i.e. Kerala Film Exhibitors Federation (OP1), Film Distributors Association (OP2) and Kerala Film Producers Association (OP3) on 06.10.2008, it was decided to fix the number of releasing stations to 48 (i.e. centers which would releases new movies). Further, as per meeting held on 25.05.2011 the release center was extended to 70. Thus, in a nutshell Shri Basheer Ahmed has also taken the defense that wide release cannot be implemented on account of agreement between these three parties.

He has furnished a copy of the minutes of the meeting circulated vide letters dated 22.06.2006 of General Secretary of KFEF sent to General Secretary FDA(K). As per the translation submitted the total number of release station has been increased to 45. Further, another letter dated 28.07.2006 has been furnished Annexure 13. This is a letter from President KFEF to the General Secretary, Kerala Film Chamber of Commerce. As per agreement dated 27.07.2006, 48 stations were to be given fresh release.

Further, another document has been submitted by KFEF which is purportedly an agreement between OP1, OP2 and OP3 Annexure 14. As per their meeting dated 04.10.2008 as per which the release center are to be fixed at 70. The relevant portion of translation is given below:

.....As per the decision taken in the Joint Meeting of Kerala Film Exhibitors Federation, Kerala Film Producers Association, Film Distributors Association (Kerala) comprising their office Bearers and Executive Committee Members held at Grant Hotel, Ernakulam on 04.10.2008, it was decided and fixed 70 release stations of pictures in Kerala. A Joint Meeting comprising the members of above was held at Gokulam Park Hotel Conference Hall, Ernakulam on 06.12.2008 to fix the name of the 70 release stations.

5.6 Release centers are said to be the stations where fresh releases are to be given. There by effectively the said agreement controls the supply of new Malayalam movies in the State of Kerala. Further, by excluding many stations and many theatres from the ambit of fresh releases it is even limiting the supply of movies in the State of Kerala.

As a result of this agreement and the conduct, the following is noted:

Public is large is inconvenienced as they are not able to watch fresh movies or they have travelled long distances to the approved centers to watch new movies.

The members of IP (KCEA) are not getting fresh releases as such they are suffering revenue losses.

The producers and the distributors are not getting wide releases as such they are suffering revenue losses.

As many theatres of Kerala (those of IP) get poor turnout of viewers who eventually watch these movies on pirated, CDs, DVDs etc. the State Government would be losing its revenues of entertainment tax (as also pointed out in the report of Kerala Chalachitra Academy).

Thus, clearly the aforesaid agreement and the practices of restricting fresh releases to the approved centers and (thus theatres) of KFEF is having appreciable adverse effect on competition as seen in the light of the provisions of section 19(3) of the Competition Act, 2002 which is discussed below. Although the agreement predates 2009, however OP1 is seen to be perpetuating/complying with it as seen from its conduct.

5.7.

a. Creation of barriers to the new entrant in the markets:

Section 19(3)(a)

The agreement is violative of the Competition Law. New entrants cannot hope to survive in this market as they would not get fresh releases because of cartelization of OP1 and compliance to it by OP2.

b. Driving existing Competitors out of the market: Section 19(3)(b)

The theatres of KCEA (IP) have not been getting fresh releases. As such their revenue is very less as compare to KFEF members. Many such theatres have closed down as stated by IP/Kerala Chalachitra Academy and the Additional Secretary to Government of Kerala. Earlier they were 1500 theatres in State of Kerala. Now only 500 theatres survive out of which nearly 300 are members of KFEF (OP1).

The non-supply of fresh releases and loss of revenue to competitors has also been highlighted in the letters of Kerala State Film Development Corporation (an undertaking of State Government) which is also not getting fresh releases (as discussed earlier in the reply of State Government and Kerala Chalachitra Academy).

c. Foreclosure of competition by hindering entry into the market: Section 19(3)(C)

As has been pointed out that the competitor theatres viz members of KCEA are not given fresh releases, which is the main source of revenue of these theatres. Clearly, there is foreclosure of competition.

d. Accrual of benefits to consumers: Section 19(3)(d)

The consumer, in non-release centers, particularly in rural and semi-urban areas is adversely effected by the said agreement and practice as they do not get to watch new movies or they have to travel far distances to watch them.

e. Improvement in production or distribution of goods or provisions of services, Section 19(3)(e)

The distribution of new movies in the State of Kerala is adversely effected as pointed earlier and this has been accepted by President of Film Distributors Association FDA (K) in his sworn affidavit.

The cartelized conduct of OP-1 is also evident from the undertaking of exhibitors, statements on oath of President of OP-2 and OP-3 and other evidences.

5.8 Clearly, the aforesaid agreement as well as the practice of restricting the supply of new movies to the agreed list of release centers, is in violation of Section 3(1) of the Competition Act. Further, this agreement is void as per the provisions of 3(2). Further, it is violative of Section 3(3)(b) of the Competition Act also as it is limiting as well as controlling the supply of movies in the market which is the State of Kerala. Although this agreement is of period prior to 2009, the OP1 is seen to perpetuate/follow it even in the later period as evident from its conduct and statements of President of OP1, other persons and evidences on record.

5.9 Issue: Whether certain film producers were banned from display in the theatres of KFEF

Evidence has been brought on record that the film Vishwaroopam, Loomier Brothers, Mahatma Ayyankali, etc. amongst others were banned/not allowed release in theatres of KFEF. The conduct of OP-1 has resulted in denial of access to market to these movies and also limiting the distributors of movies. Evidences has been discussed in detail Chapter 4.

5.10 Issue: Whether producer/distributors are prohibited from release of movies in the theatres of IP

From the statement on oath and affidavits of the President of OP-2 (Shri Siyad Koker) and President of OP-3 (Shri G. Suresh Kumar) it is quite clear that the above is true. Further, Shri K.A. Jaleel and Shri Hamsa have also accepted denying release to theatres of IP under pressure/threat from OP-1. Further, circulars have been issued by OP-1 directing the General Secretary of FDA (K) OP-2 not to release movies in unapproved centres or to face consequences of the Act. The evidences discussed in Chapter 4 confirm the issue of investigation.

5.11 Conclusion

From the submissions, affidavits and evidences furnished by the IP, OP-2, IP03, OP-4, OP-5 and third parties the following points emerge:

(a) The members of IP (KCEA) are indeed denied fresh releases.

(b) This is done due to the cartel of members of OP-1 who are having over 300 theatres in bigger town and cities as compared to 171 theatres of IP and have a much greater economic clout.

(c) Many films which were displayed in theatres of IP were boycotted by the cartel of members of OP-1.

(d) The distributors and producers are not free to display their new movies or give fresh releases to the members of IP as their movies will be banned in the theatres of member of KFEF (OP-1)."

[Underlining is ours]

12. In Chapter-8, the Addl. DG recorded his conclusions. Paragraphs 8.2 to 8.6 of that chapter are extracted below:

"8.2 The evidences furnished during the course of investigation in form of undertakings of theatre owners, statements on oath of Presidents of OP-2 and OP-3 and there affidavits, media reports, submission and affidavits of 3rd parties etc. clearly confirm the allegation that the members of the IP are being denied release of new movies in their theatres. This is happening because of the conduct of the members of cartel of OP-1 which openly threat ban on movies in their theatres if the same is released to the theatres of KCEA (IP). They prohibit OP-2 (in particular) and OP-3 from giving any fresh releases to the members of OP-1. This is clearly evident from the statements on oath and affidavits furnished by the Presidents of OP-2 and OP-3 respectively. Besides, this is also confirmed by certain other distributors and producers. Further, OP-1 has banned those movies and producers which have dared to release their movies in the theatres of IP or wanted an all Kerala release. This is also evident from the statements and affidavits of President of OP-2 and OP-3, as well as documentary evidences, affidavits and replies furnished by specific producers and 3rd parties like Raajkamal Film International. The above allegations are also substantiated from the media reports particularly The Hindu news items.

8.3 The conduct of the cartel of OP-1 has resulted in denial of business and loss of revenue to the theatres of IP. It has inconvenienced the public particularly in the rural areas who do not get to watch new movies in the theatres. It has also caused lack of wide release and loss of revenue to the producers and loss of entertainment taxes to the State Government.

8.4 The aforesaid conduct of OP-1 has appreciable adverse effect on competition in the market of distribution and exhibition of Malayalam and Tamil movies in the State of Kerala, as it is controlling and limiting the distributors as well as exhibitors of the films. The conduct is found to be clearly violative of section 3(3)(b) of the Competition Act 2002. Further, the agreement referred by the OP-1 (between OP-1, OP-2 and OP-3) to restrict the new releases to pre-determined release centres is violative of sec. 3(1) read with the provision of sec. 19 (3).

8.5 OP-2, that is Film Distributors Association (Kerala) has been found to be guilty of not providing new releases to the members of IP thus violated sec. 3(3)(b) of the Act. OP-2 is seen to have succumbed to the pressure of OP-1 because of the economic clout enjoyed by OP-1 on account of its dominant position. It is also a signatory to the agreement to release new movies at select centres, which is violative of provisions of sec. 3(1) and is seen to be perpetuating the agreement by its conduct.

8.6 OP-3 i.e. the Kerala Film Producers Association, as per its conduct, was seen to be opposed to the restriction on wide release imposed by the cartel of member of OP-1. Its own interest is inimical to the interest of the cartel as the producers want wide release. This is also borne out from the stand taken in public by the President of OP-3, as evident from media reports. However, OP-3 in 2006 and 2008 signed the agreement along with OP-1 and OP-2 to limit the release of new movies to the predetermined centres. But is not seen to be supporting the agreement as seen from its conduct.

13. The Commission considered the report of the Addl. DG and directed that copies thereof be forwarded to the parties to enable them to file their objections/suggestions.

14. On receipt of the copy of the investigation report, Appellant No. 1, Respondents Nos. 3 to 6 and the President of Respondent No. 3 filed their respective objections. For the sake of reference, paragraphs 1 to 9 of the objections filed by Appellant No. 1 are reproduced below:

"1. It is submitted that initially there was only one Association among the theatre owners i.e. The Kerala Cine Exhibitors Association had nearly about 1348 cinema theatres out of which nearly 150 members were releasing the movies and others were shifting the movies one after the other. In these circumstances, the theatres that were advancing the huge amounts to producer/distributor and releasing the movies, started another organization namely The Kerala Film Exhibitors Federation. It is submitted that Respondent No. 1 Organization was established under the Travancore Cochin Literary scientific and charitable societies Act XII of 1995 to encourage, to promote and to safe guard the welfare of its members who are engaged in the film industry. It is submitted that in the State of Kerala release station were: 1) Thiruvananthapuram, 2) Kollam, 3) Alleppey, 4) Kottayam, 5) Ernakulam, 6) Trichur, 7) Tirur, 8) Vadakara, 9) Calicut, 10) Kannur and 11) Thalassery. It is submitted that Malayalam films simultaneous release stations were limited because the cost of one centre print was nearly about Rs. 50,000/- and the other expenses like publicity expenses has to be covered, so for more prints the producer/distributors was required to invest more amount of money.

2. It is submitted that later on when more theatres started giving more advances to producer/distributors and the release station were also increased to 18 in the year 1969, 32 in the year 1973, 48 in the year 2006, 70 in the year 2008 etc. It is submitted that the release theatres were fixed by the Kerala Film Chamber of commerce which was established in 1956. The Kerala Film Chamber of Commerce is the Apex Body of Kerala Film Industry which consists of: a) The Kerala Film Producers Association b) The Film Distributors Association (Kerala) c) The Kerala Cine Exhibitors Association d) The Kerala Film Exhibitors Federation. It is submitted that the Kerala Film Chamber of Commerce is the Apex body which is a necessary party and their non-joinder is fatal to the Investigation and therefore the Investigation report of Director General (CCI) is handicapped and defective.

3. It is submitted that the Director General (CCI) in its investigation report alleged that the Respondent No. 1 violated Section 3(1), 3(2), 3(3)(b) of the Competition Act, 2002. It is submitted that the Director General (CCI) in its investigation report has placed heavy reliance on the statement and affidavit of Shri Siyad Koker, President of Film Distributor Association (Respondent No. 2) and statement and affidavit of Shri G. Suresh President, of Kerala Producer Association (Respondent No. 3.).

It is submitted that both of them with a mala fide and dishonest intention withheld from the Director General (CCI) about the formation of a body called Self Regulation Council for release of movies. It is pertinent to state that Self Regulation Council consists of 10 members out of which 5 representatives from Film representatives from Kerala Producer Association (Respondent No. 3) who dictates terms of release of movies in the State of Kerala. It is submitted that Respondent No. 1 Exhibitor has little say in the release of movies in the State of Kerala. A true translated copy of the Circular No. 1/2012-2013 dated 31.05.2012 is annexed hereto and marked as Annexure-R1/1. It is submitted that Film Distributor Association (Respondent No. 2) and Kerala Producer Association (Respondent No. 3) controls the Self Regulation Council and has power to fix the release dates, number of stations to be release. The Respondent No. 1 is not at all a party in this Self Regulation Council and the Council does not provide sufficient number of movies.

4. It is submitted that the Director General (CCI) in Chapter 4 of its investigation report has stated as under:

"The Film Chamber of Commerce, is considered to be the Apex body of the producers, Distributors and the Exhibitors. All the above Association try to protect their interest in the industry even by resorting to strike, closing down of Cinema halls, stopping of production, protests, etc. In the industry there are internal conflicts within the association, issues between the associations and common problems affecting the industry.

As a policy Government of Kerala wants a strong and better film industry at the same time wants to protect the interest of all the groups whether weak or strong. As a policy matter, the government does not want to enforce much regulation in the industry. It allows the various association and the Film Chamber to settle their internal disputes. Kerala State Chalachitra Academy is an organ of the State to act as a middle man between the industry and the State. It was formed as a society and is fully funded by Government by its grant in aid.

In the chain of cinematography business, distribution and exhibition is having integral and most important part. In the absence of any regulator in the market of film production, distribution and exhibition, the associations of film producers, film distributors and that of exhibitors play a pivotal role in the functioning of the system. The absence of a strong regulator is the root cause of inter-association disputes between the various players in the Kerala Film Industry".

It is submitted that in order to come under Section 3, there has to be an agreement between the entities engaged in identical or similar business and this is not being the case here and therefore no breach of section 3. It is further submitted that there was no evidence about the agreements between the associations under Section 3 and that there was no evidentiary proof regarding the agreement to attract section 3 qua the Respondent No. 1.

5. It is submitted that the business of film making consists of various stages involving pre-production, production, post-production, distribution and exhibition. A distributor acquires distribution rights from the producer of a film and thereafter recovers his costs from the revenues earned through exhibition of that film. It is submitted that when a film is announced having a particular story and a star case, producer requires funds to produce the movie. It is submitted that the finance is either provided by private financiers or by the distributors of the films. The distributors in turn used to get finance from the exhibitors who are the owners of single screen theatres in different regions. It is submitted that by providing the finance the exhibitors acquires the right to exhibit the film in the areas. The agreements entered into by the producers and the distributors were on outright sale or minimum guarantee basis. Sometimes, the producer or the distributors used to the hire the cinema halls of the exhibitors for a certain period at a negotiated price and the producer/the distributor used to negotiate the hiring charges. Thus the (distributor and the exhibitor) used to provide large chunks of finance for making the movies. It is submitted the association formulated bye-laws and working as dispute resolution agencies for dispute between the exhibitors, between the producers and the distributors/exhibitors and between the distributors and the exhibitors. These associations regulated the business in the way that once a producer/distributor had agreed to give the business of exhibition to an exhibitor, the producer/distributor could not then give the rights to another exhibitor. In this manner, the pecuniary interest of the exhibitors were protected. Similarly, when there were similar disputes between the producers and the distributors/exhibitors, these association protected the interest of their members. It is submitted that huge amount accumulate for theatres and the theatre owners unable to withstand and forced to shut down their theatres. A true copy of the proof of such theatres like Partha Theatre, TVM, Apsara theatre Kozhikode and Ajantha theatre TVM is annexed hereto and marked as Annexure-R1/2. In order to avoid such dangerous situation Respondent No. 1 decided not to exhibit films of such producers in the theatres of Respondent No. 1 and due to same their movies were exhibited in the theatres of K.C.E.A. (IP).

6. It is submitted Kerala State Government has appointed an Organisation namely the Kerala Chalachitra Academy (Respondent No. 4 to oversee to problems faced by the theatre owners and in the year 2012 there was only 504 theatres in Kerala and out of 504 theatres, 334 theatres became releasing theatres and 171 shifting theatres. It is submitted that in the State of Kerala follows the same pattern as in existence like in other states in the country. It is submitted that at first a movie is being released in selected theatres in a state usually called "A" centres after one or two weeks, the movie shifted to "B" centres and then to the "C" centres which usually is the trade practice in the country. It is submitted that for a movie were no amount is advanced from the members of Respondent No. 1, the Distributors/Producers can release in any number of theatres as they wish.

7. It is pertinent to state that movies like Maya-bazar, Kurushetra were exhibited by K.C.E.A. (IP) members as well as by respondent No. 1 members, as all advances were refunded by the producers and distributors. It is submitted that with respect to the allegation regarding Onam release movies:

* Villaliveeran

* Saptamasree Thaskaraha

* Peruchazhi

* Rahadhi Raja

* Bhayya Bhayya

It is submitted that the members of the Respondent No. 1 have advanced nearly 10 crores rupees and therefore Film Distributor Association (Respondent No. 2) and Kerala Producer Association (Respondent No. 3) who controls the Self Regulation Council decided that the Onam movies will be released in 303 theatres and statement given by Mr. G. Sureshkumar is baseless and he is in Self Regulation Council and he is the President of Kerala Producer Association (Respondent No. 3).

8. It is submitted that with respect to movies like a) Bangalore Days, b) How Old Are You, C) Drisyam the screening dates were fixed by the Film Distributor Association (Respondent No. 2).

9. It is submitted that with respect to movie "Mahatma Ayyankali" that the same was not banned by Respondent No. 1 but poor collection records affected the movie. It is submitted that with respect to movie "Rasaleela" it is submitted that nearly 40 stations of Respondent No. 1 members has screened this movie which can be verified from UFO, QUE, PXD. A true copy of the proof is annexed hereto and marked as Annexure-R1/3. It is submitted that with respect to movie "Viswaroopam", the theatre owners were under threat of destruction of property from anti social elements due to controversy surrounding the movie. It is submitted that Mr. M.M. Hamsa, Mr. K.A. Jaleel, Mr. P. Sreekumar and Mr. Anto are the four distributors who released their movies as they collected money from the members of Respondent No. 1 and huge advance amount is still pending. It is submitted that Respondent No. 1 has not banned any movies as stated by the President G. Sureshkumar "Chattakkari, Kurushetra, Maya Bazar" which is evident from the release station list. It is submitted in answer to Q-8 in page-39 by the FDA President Siyad Koker have stated that the picture "Kurushetra" was released in all station in Kerala. It is submitted that movie "Chattakkari" was not banned which is evident from release station list. It is submitted that regarding the movie "Chattakkari" no Association and Producers Association, FDA Chamber has never had a meeting for the release of the pictures. A true copy of the proof is annexed hereto and marked as Annexure-R1/4 (colly)."

15. In its reply, Respondent No. 3 claimed that release of the film is controlled by Self Regulation Council i.e. Kerala Film Chamber of Commerce. However, it supported the findings by the Addl. DG against Appellant No. 1.

16. In his reply, Appellant No. 3 stated that Respondent No. 3 is supplying films to the theatres in Kerala; that in the joint meeting held between Appellant No. 1 and Respondents Nos. 3 and 4 on 04.10.2008, it was decided to release new pictures upto maximum of 70 theatres; that the distributors prefer and supply films to A category theatres because they generate maximum revenue and that when the projector system was replaced by the digital system of screening movies, distributors started supplying pictures to more theatres. He further stated that during the Onam festival in 2014, Respondent No. 3 requested its members to give movies to new theatres but due to restriction imposed by Appellant No. 1 that could not be done.

17. Respondent No. 4 did not file any reply. Respondents Nos. 5 and 6 did not raise any substantive objection to the findings recorded by the Addl. DG.

18. After taking cognisance of the written replies, the Commission formulated the following point:

"Whether the Opposite Parties had infracted any of the provisions of Section 3(3) read with Section 3(1) of the Act."

The Commission then referred to the allegations made by Respondent No. 2, the statements recorded by the Addl. DG and other evidence produced before him or collected by him and approved the findings recorded in the investigation report that Appellant No. 1 and Respondent No. 3 are guilty of acting in violation of Section 3(3)(b) read with Section 3(1) of the Act. All this is discernible from paragraphs 5.2 to 5.21 of the impugned order, which are reproduced below:

"5. Issues and Analysis

5.1 The Commission has perused the DG report, the replies/objections filed by the Informant and the Opposite Parties along with the material available on record, besides hearing the counsel appearing for the parties. On careful consideration of the matter, the Commission is of the opinion that in order to arrive at a decision, the only issue that needs to be determined in the matter is as to whether the Opposite Parties have infracted any of the provisions of section 3(3) read with section 3(1) of the Act.

5.2 From the material placed on record, it is an un-controverted fact that OP-1 was restricting/limiting the release of new movies in certain theatres. As per OP-1, such restriction stemmed from an agreement between OP-1, OP-2 and OP-3 whereby it was agreed that the new movies will only be released in theatres which had modern facilities like AC, DTS, cafeterias, toilets etc.

5.3 The aforesaid issue requires determination of two points -- firstly, whether OP-1, OP-2 and OP-3 acted contrary to the provisions of the Act by entering into such an agreement wherein they decided the criteria for short listing theatres which would be getting fresh releases and secondly, whether the justification offered by them i.e., the criteria of modern facilities was actually used as a basis in a non-discriminatory manner. On the latter, the DG has found enough evidence to show that there were many theatre owners, who are the members of the Informant and equipped with modern facilities and were eligible to get release of the films as per the norms formulated by OP-5, but were not getting fresh releases. The members of the Informant have unanimously submitted before the DG that they are unable to release movies due to the anti-competitive conduct of OP-1. Further, documents have also been placed before the Commission which show that some of the members of OP-1 were getting fresh releases in spite of the fact that they did not own the infrastructure required as per the classified list of the Committee appointed under OP-4. The DG has placed on record undertakings from various theatre owners (members of the Informant) who were eligible to get fresh releases but were denied instead. Further the DG also placed on record the list of theatre owners (members of OP-1) who were ineligible to get fresh releases as per the classification done by the Committee appointed by the Government of Kerala under OP-4 but were getting fresh releases. A combined reading of both these facts i.e., despite having necessary infrastructure and appropriate classification/grading from the Committee appointed by the Government of Kerala under OP-4, the theatres owned by members of the Informant were not getting fresh releases/new movies and the members of OP-1 were getting new releases despite not having such facilities and classification/grading leads to only one inference that the same happened because of the interference from OP-1.

5.4 The next point which requires determination, i.e., whether OP-1, OP-2 and OP-3 acted contrary to the provisions of the Act by entering into such an agreement. There is no denial that an agreement was entered into between OP-1, OP-2 and OP-3. The Commission has taken note of the document submitted by OP-1 in this regard before the DG. As per the said agreement, in their meeting dated 06.10.2008, OP-1, OP-2 and OP-3 fixed the number of release stations at 70 and it was further decided that the new releases will not be given to any other theatre apart from the 70 theatres agreed upon. It was further decided that in case any other theatre comes up with modern facilities such as AC, DTS infrastructure, there shall be a joint meeting of OP-1, OP-2 and OP-3 to take a decision in this regard. Further, in the English translation of the meeting held on 06.10.2008 where OP-1, OP-2 and OP-3 took such decision, it was stated as follows:

The Joint Directors at the meeting of the office bearers and members of the Managing Committee of the Kerala Film Exhibitors Federation, Kerala Film Producers Association, Film Distributors Association (Kerala), held on 06.10.2008 at the Conference Hall of the Gokulam Park, Ernakulam, pursuant to the decisions of the joint meeting held on 04.10.2008 at the Grand Hotel Ernakulam to decide which are the 70 release stations fixed in Kerala and to discuss the other matters relating thereto.

5.5 A plain reading of the terms of the agreement makes it clear that OP-1, OP-2 and OP-3 were trying to control the new releases under the garb of ensuring modern facilities. Further the same was signed by the representatives i.e., the respective Presidents of OP-1, OP-2 and OP-3.

5.6 The Commission has already noted that the modern facility plea taken the OP-1 was a ruse as many theatres of the members of OP-1 which did not have these facilities were getting new releases whereas many theatres of the members of the Informant which have these facilities were denied new releases. Even otherwise, the Act condemns such decisions taken by the associations which limits/restricts the supply of goods/services and affects competition in the market.

5.7 Undoubtedly, the trade associations are for building consensus among the members on policy/other issues affecting the industry and to promote these policy interests with the government and with other public/private players. The activities of any Association(s) should not be intended to restrain competition or to harm consumers. Neither the Association nor any of its committees or activities should be used for the purpose of bringing about or attempting to bring about any understanding or agreement, written or oral, formal or informal, express or implied, between and among competitors with regard to practices of limiting or controlling production, supply, markets etc. The trade associations provide a forum for entities working in the same industry to meet and to discuss common issues. They carry out many valuable and lawful functions which provide a public benefit e.g., setting common technical standards for products or interfaces; setting the standards for admission to membership of a profession; arranging education and training for those wishing to join the industry; paying for and encouraging research into new techniques or developing a common response to changing government policy. However, when these trade associations transgress their legal contours and facilitate collusive or collective decision making, with the intention of limiting or controlling the production, distribution, sale or price of or trade in goods or provision of services by its members, it amounts to violation of the provisions of the Act. This has happened in the instant case.

5.8 The Associations i.e., OP-1, OP-2 and OP-3 have transgressed their legal contours and indulged in collective decision making to limit and control the exhibition of films in the theatres other than the ones owned by the members of OP-1. The Commission does not see any rational justification for prescribing such criteria which is exclusionary in nature. The Commission observes that the Committee formed under OP-4 physically inspected various theatres in the State of Kerala and categorized them into Category A i.e., the best theatres (approved as releasing centres), Category B (approved as releasing centres) and Category C (not fit as releasing centres). This categorization was based on the existing facilities at the theatres like UFO, DTS systems, QUBE systems, air conditioning, cafeteria, parking, clean toilets and other facilities. The objective of the categorization was to give wide release to those theatres which are fit for getting new releases. Further, this would also act as an incentive to the C category theatres to improve their facilities and to qualify as release centres.

5.9 However, the agreement between OP-1, OP-2 and OP-3 in limiting the theatres to 70 without any logical basis was nothing but the manifestation of their anticompetitive conduct to benefit the members of OP-1 at the expense of other theatre owners and movie goers i.e., consumers. The Commission has already discussed that some of these selected theatres did not have the modern facilities while some of the other theatres which were not included in this list were well equipped with modern facilities as per the categorization of the Committee formed under OP-4. Therefore, the agreement is in contravention of section 3(3)(b) read with section 3 of the Act as the same is limiting/restricting and controlling the supply of new releases in the market. The Commission agrees with the DG that although this agreement is of period prior to 2009, the same was perpetuated/followed even post 2009 as is evident from the material placed on record. Thus, the plea taken by Shri Basheer Ahmed, President of OP-1 that wide release can only be given in theatres having modern amenities like AC, DTS, cafeterias, toilet, spacious parking etc. as per classification done by OP-4 is liable to be rejected.

5.10 Having established that the agreement dated 06.10.2008 entered into between OP-1, OP-2 and OP-3 is anti-competitive in violation of section 3(3)(b) read with section 3(1) of the Act, it is pertinent to determine the liability of OP-1, OP-2 and OP-3 in the said arrangement.

5.11 The Commission has noted the observations of the DG and response of OP-1, OP-2 and OP-3 in this regard. It is relevant to note that OP-1, OP-2 and OP-3 are associations and practice carried on or decision taken by any of these associations would individually also bring their conduct to be liable under section 3(3) read with section 3(1) of the Act. OP-2 and OP-3 have denied their active involvement in the agreement dated 04.10.2008 and averred that they acted under the pressure and threat from OP-1.

5.12 There is enough evidence on record which shows that the conduct of denial of fresh release to the members of the Informant was perpetrated by OP-1. Audio transcription of the news report on TV channel Reporter was submitted by the DG which was telecasted before Onam. In the said TV programme, Shri P.V. Basheer Ahmed, President of OP-1 stated that Nothing will happen, tomorrow only federations 303 theatres will screen Onam movies, nobody will give any movie to any other theatres. In no way will wide release be allowed.

5.13 This statement shows that OP-1 was ensuring that the theatres other than its members would not get any new releases. It is clear that OP-1 also ensured the same by spreading the said diktat through television. There were similar instances mentioned in the DG report, as highlighted in earlier part of this order, substantiating active involvement of OP-1 in ensuring that members of the Informant do not get new releases. Therefore, active involvement of OP-1 is beyond doubt. The activities and conduct of OP-1 have resulted in limiting/restricting the distribution of film in the market. Further, it is evident from the findings of the DG that OP-1 took the decision to boycott all such films which were displayed in the theatres of the members of the Informant. Therefore, it is revealed that OP-1 and its members wanted to display the movie only in their theatres exclusively and not in the theatres of the members of the Informant. Such conditions of exclusivity go against the spirit of competition.

5.14 Further it was also noticed by the Commission that OP 1 was keeping a track as to whether the decision i.e. the agreement entered into between OP-1, OP-2 and OP-3 is being complied with or not. It will be pertinent to illustrate a letter dated 23.06.2009, sent by Shri M.C. Bobby, General Secretary of OP-1 to the General Secretary of OP-2. In the said letter, OP-1 directed OP-2 to direct its members not to violate the decision taken by them jointly with regard to releasing film only in theatres decided upon by them. A similar letter was again sent by OP-1 to OP-2 on 07.10.2010 indicating displeasure of OP-1 regarding violation of the decision taken by the joint agreement in 2008 by members of OP-2.

5.15 From the aforesaid, it is clear that OP-1 has imposed restrictions to limit the market of film distribution/exhibition business in the State of Kerala. The above conduct and action of the OP-1 has led to controlling the film industry in the instant case causing an adverse effect on competition within the film exhibition market in Kerala and such conduct is in contravention of section 3(3)(b) read with section 3(1) of the Act.

5.16 OP-2 has submitted that it succumbed to the dictates of OP-1. It is to be noted that OP-2 is the association of film distributors who are responsible for the release of the films to the individual exhibitors. Sh. Siyad Koker has accepted before the DG that fresh releases are not being given to the members of the Informant. Further, he also highlighted that though individual distributors may release new movies to any theatre which is not a member of OP-1, such film would not be displayed in the theatres of the members of OP-1, resulting in a substantial loss of revenue to the distributors and producer.

5.17 The Commission acknowledges that even though OP-2 acted under the pressure of OP-1, there is no denial of the fact that OP-2 indeed entered into an agreement with OP-1 vide which they have agreed to release the movies only at the pre-determined release centres. Therefore, as an association they have agreed not to release fresh movies to the members of the Informant. Thus, it is apparent that the allegation against OP-2 for non-supply of new release to the members of the Informant is correct. It is a matter of record that OP-2 has been a party to the agreements signed in 2006 and 2008 vide which the distribution and exhibition of new movies were to be limited to pre-determined release centres. President of OP-2, Shri Siyad Koker in his statement on oath before the DG stated that there is no formal agreement. However, admittedly there was an agreed list of theatres pertaining to the members of OP-1, and members of OP-2 were supposed to release the movies in these theatres only.

5.18 The Commission is of the view that the arrangement accepted by Shri Siyad Koker i.e., informal arrangement/decision taken at a meeting by the OP-1, OP-2 & OP-3 suffices the essentials of an agreement as defined under the Act. As per the provision of section 2(b) of the Act;

"Agreement includes any arrangement or understanding or action in concert: - (i) whether or not, such arrangement, understanding or action is formal or in writing; or (ii) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings."

5.19 The aforesaid decision to release the new movies only in the theatres of the members of OP-1 clearly falls within the ambit of an agreement as per the section 2(b) of the Act. Although the agreement itself is said to have taken place prior to 2009, however OP-2 by its conduct has been perpetuating/following the essence of this agreement even thereafter by not allowing release of new films to the members of the Informant. Since OP-2 is an association of distributors and it entered into the agreement on behalf of its members, the agreement/understanding or practice carried on by it is liable to be looked into under section 3(3) of the Act. From the evidence placed on record, it is clear that OP-2 is guilty of not distributing movies to the theatres of the members of the Informant and thus violating section 3(3)(b) read with section 3(1) of the act. This conduct of OP-2 has led to controlling of the market as well as limiting the distribution/supply of new releases in the market. Accordingly, the Commission is of the view that such conduct clearly falls within the mischief of the provisions of section 3(3)(b) read with section 3(1) of the Act.

5.20 In view of the foregoing, it is clear that OP-2 was following the diktats of OP-1 and acting in pursuance of the agreement that was entered into between them in 2008. The aforesaid has been noted to be factually correct as the film Vishwaroopam which was displayed in the theatres of the members of the Informant was not allowed to be released in theatres of the members of OP-1. Similarly other movies like Loomier Brothers, Mahatma Ayyankali etc., were not allowed to be displayed in the theatres of the members of OP-1 because the distributors had given release to the members of the Informant. The Commission has no doubt that OP-2s conduct post-2009 in denying fresh releases to the theatres of the members of the Informant was anti-competitive in nature. OP-2 has submitted that theatres of the members of OP-1 are in revenue yielding districts, corporations and municipalities and as such a film cannot gain much revenue if it is not displayed in the theatres of OP-1 members. Therefore, it was claimed that OP-2 has no option but to succumb to the diktats of OP-1 to protect the commercial interest of its members. This, in view of the Commission, can at best be a mitigating factor while prescribing penalty in the instant matter. The same cannot absolve OP-2 of its liability under the Act.

5.21 Thus, OP-2 association is guilty of acting in tandem with OP-1 by denying fresh release to the theatres of the Informant. It is also guilty of signing and complying with an anti-competitive agreement with OP-1 and OP-3, limiting the distribution of movies to pre-determined release centres thus, violating the provisions of section 3(3)(b) read with section 3(1) of the Act. Further, it is to be noted that OP-1 and OP-2 have not been able to rebut the presumption raised under section 3(3) of the Act by showing that these agreements do not have appreciable adverse effect on competition."

19. The Commission also considered the role of Appellants Nos. 2 and 3 and held that both of them were in-charge of and in control of the business of Appellant No. 1 and Respondent No. 3 and held that they are liable to be penalised for contravention of the provisions of the Act. On that premise, the Commission passed a cease and desist order against the appellants and Respondent No. 3 and also imposed penalty of Rs. 56,134/- on Appellant No. 1, Rs. 45,189/- on Respondent No. 3, Rs. 39,478/- on Appellant No. 2 and Rs. 33,445/- on Appellant No. 3.

20. Shri Ram Kumar, Senior Advocate for the appellants argued that the impugned order is liable to be set aside because the findings recorded by the Addl. DG and the Commission on the issue of anti-competitive conduct of Appellant No. 1 and Respondent No. 3 is not based on any legally admissible evidence. Learned senior counsel submitted that Appellant No. 1 cannot be held guilty of anti-competitive conduct enumerated in Section 3(3)(b) of the Act because the decision taken by Appellant No. 1 to prohibit the release new films in the theatres, of whose owners are members of Respondent No. 2, was based on rational reasons and keeping in view the non-availability of the amenities and facilities in those theatres. He submitted that classification of theatres was done by Respondent No. 5 after due consideration of all the relevant factors and it is always in the interest of the film producers and exhibitors to exhibit the films in the theatres which can generate more revenue. Learned senior counsel further submitted that large number of theatres owned by the persons, who are members of Respondent No. 2, are situated in rural areas and release of new films in the theatres located in the far flung areas is detrimental to the interest of the film producers and exhibitors. Learned senior counsel then argued that Appellant No. 1 had not imposed any ban and no attempt was ever made to control the production or release/exhibition of the films at any given point of time so as to attract the provisions of Section 3(3)(b) of the Act. He further argued that the Addl. DG and the Commission committed serious error by presuming that the so-called anti-competitive conduct of Appellant No. 1 and its office bearers had appreciable adverse effect on competition.

21. Learned counsel for the Commission and Respondent No. 2 supported the impugned order. They relied upon the replies given by Respondents Nos. 3 and 4 to the notices issued by the Addl. DG under Section 36(2) read with Section 41(2) of the Act, the affidavits filed by the office-bearers of the various associations, transcript of Television interview given by Appellant No. 2 as also the newspaper clippings/reports to show that Appellant No. 1 had repeatedly imposed restrictions on the release of films in the theatres of whose owners are members of Respondent No. 2 and the threat held out to the producers and exhibitors that the movies which are released in the theatres of the members of Respondent No. 2 will result in non-release thereof in the theatres owned by its members. Learned counsel also justified imposition of penalties on Appellants Nos. 2 and 3 by saying that they were in-charge and were responsible for the affairs of Appellant No. 1 and Respondent No. 3, respectively and actively taken part in ensuring that the new films are not released in the theatres of the members of Respondent No. 2.

22. We have considered the respective arguments and carefully perused the record. As noted in the earlier part of this order, the Addl. DG issued notices to the parties and others under Section 36(2) read with Section 41(2) and called upon them to furnish information and documents which have bearing on the allegations of the cartelisation and abuse of dominant position levelled by Respondent No. 2. He also recorded the statements of Appellants Nos. 2 and 3, Shri G. Suresh Kumar (President of Respondent No. 4) and Shri Rajendran Nair (Secretary of Respondent No. 5). The Addl. DG also received the affidavits filed by S/Shri K.J. Antony, M.M. Hamsa, K.A. Jaleel, G. Suresh Kumar and Shaji Vishwanathan. Apart from this, he took into consideration ten documents/reports to which reference has been made in paragraph 6 of this order. At every stage, the Addl. DG gave opportunity to Appellant No. 1 to clarify its position and to produce evidence to controvert what was stated against it by S/Shri G. Suresh Kumar, Rajendran Nair and Shri Shaji Vishwanathan and others. Appellant No. 2 was confronted with each and every piece of evidence and questioned with reference to various resolutions passed by Appellant No. 1 and others as also the statements made by him in the print and electronic media. The Addl. DG gave cogent reason for rejecting the assertion of Appellant No. 2 that the Federation has not indulged in cartelisation or had not abused his dominating position vis--vis Respondent No. 2. His plea that as per the agreement reached between Appellant No. 1 and Respondents Nos. 3 and 4, new movies were released only in limited number of theatres excluding the theatres owned by the members of Respondent No. 2 as they did not have the modern facilities, was found by the Addl. DG to be factually incorrect. Henoted that as per the classification done by the Committee, a number of members of Respondent No. 2 had theatres with all modern facilities but they were not provided with new films and as many as 31 theatres belonging to the members of Appellant No. 1, who did not fulfil the criteria formulated by the Committee, were given fresh releases. The Addl. DG also took cognisance of the agreements entered into between Appellant No. 1 on the one hand and Respondents Nos. 3 and 4 on the other to limit the number of theatres for release of the new films and observed that by entering into such agreements, they had controlled the supply of new Malayalam movies in the State of Kerala and excluded many stations and many theatres from the ambit of fresh release and concluded that such agreements were anti-competitive. The Addl. DG specifically discussed issue relating to release of films on the occasion of Onam festival and noted that Appellant No. 2 had boasted in a TV interview that wide release will not be implemented and no producer is brave enough to implement the decision regarding wide release of the movies. He also claimed that only 303 theatres of the Federation will screen Onam movies and nobody else will be given any movie. The Addl. DG considered the entire evidence and concluded that the cartel was formed by Appellant No. 1 with Respondent No. 3 for preventing release of new movies in the theatres of the members of Respondent No. 2. The Addl. DG also discussed the ban/boycott of films released in the theatres owned by the members of Respondent No. 2, referred to the answer given by Appellant No. 2 and observed that even though the latter suggested that movie Rasaleela was released in the theatres of those who are not members of Appellant No. 1 but observed that no evidence was produced to substantiate the same. He then discussed the ban imposed by Appellant No. 1 to the screening of film Vishwaroopam, referred to the statement of G. Suresh Kumar, affidavit of Shaji Vishwanathan as also the media reports along with the statement on oath made by Appellant No. 3 and concluded that a concerted effort was made to prevent the screening of that film because the producer had decided to release the film in the theatres belonging to the members of Respondent No. 2. Similarly, he made detailed discussion regarding the ban imposed on movie Loomier Brothers and concluded that there was a designed attempt to prevent the screening of movie.

23. The Commission independently examined the entire material, took cognisance of the objections filed by Appellants Nos. 1 and 3 and recorded its unequivocal agreement with the findings of the Addl. DG. The Commission held that the conduct of Appellant No. 1 and Respondent No. 3 in preventing the release of new movies in the theatres owned by the members of Respondent No. 2 was anti-competitive and that Appellant No. 1 had used its dominating position to limit/restrict the screening of new movies/releases and also denied market access to Respondent No. 2 and others. The Commission also discussed the role of Appellants Nos. 2 and 3 and recorded its agreement with the Addl. DG that they had played crucial role in the anti-competitive conduct of Appellant No. 1 and Respondent No. 3.

24. We are in complete agreement with the findings recorded by the Addl. DG, which have been approved by the Commission and hold that the impugned order does not suffer from any legal infirmity requiring interference under Section 53B of the Act. The penalty imposed by the Commission on the appellants and Respondent No. 3 is also commensurate with their misconduct of violating the provisions of the Act and we do not find any valid ground to interfere with the same.

25. Before parting with the case, we are tempted to observe that the Addl. DG had holistically followed the procedure laid down in the Competition Commission of India (General) Regulations, 2009 (for short the Regulations) and the principles of natural justice, which are statutorily engrafted in Section 36(1) of the Act. We have extracted in great detail the portions of the investigation report to emphasise that if other officers entrusted with the task of investigation follow the suit, the Tribunal will not be burdened with cases involving the challenge to the orders passed by the Commission on the ground of the prescribed procedure and the principles of natural justice. We hope and trust that the Commission will take cognisance of these observations and issue necessary instructions/advice to the DG and other officers to adopt a methodology for conduct of investigation in consonance with the provisions contained in the Regulations and the principles of natural justice. The net result of the above discussion is that the appeal is without merit and is liable to be dismissed. Ordered accordingly.