The Consumer Unity and Trust Society (CUTS), a public policy research and advocacy group, has filed an information with the Competition Commission of India (CCI), urging it to investigate the likely anti-competitive effects of the proposed merger between PVR Ltd. and Inox Leisure Ltd. The boards of the two largest national multiplex chains in March this year approved an all-stock merger of the companies to create India’s largest film exhibition entity. The merged entity will have more than 1,500 screens.
After the merger, Inox promoters will own a 16.66% stake in the combined company while PVR founders will own 10.62%. PVR’s Ajay Bijli will serve as the managing director of the new company, and Sanjeev Bijli will be the executive director.
The two multiplex chains had earlier emphasised that the merger proposal did not require CCI approval as both were shut for months during the pandemic, impacting their combined revenue which was less than Rs. 1,000 crore. Had it not been for the COVID-19 lockdowns, the PVR-Inox merger would not have qualified for exemption from mandatory merger review by the CCI, said CUTS which has now approached it to investigate the matter.
After the merger, the new entity will become the largest player in the film exhibition industry in the country. This would mean that the merged company will have a significant market share in most of the cities of India. In specific terms, CUTS said that PVR-Inox is likely to become the largest player in 43 cities, with market share in excess of 50% in at least 19 cities. According to CUTS, competition concerns arising from this include reduction in consumer choice because of which consumers will have no effective option but to visit the multiplexes owned by PVR-Inox, high ticket prices, and a possible deterioration in food and service quality. Also, the better bargaining power of PVR-Inox will likely lead to onerous terms for distributors, food and beverage suppliers, technical equipment suppliers, etc.
In a statement, CUTS secretary general Pradeep S. Mehta said, “The CCI has a duty to prevent and eliminate practices having an appreciable adverse effect on competition, or practices which promote and sustain competition, and to protect the interest of the consumers.”
