In April this year, the Competition Commission of India (CCI) imposed a cumulative penalty of Rs. 2.69 crore on UFO Moviez, its subsidiary, Scrabble Digital, and Qube Cinema Technologies for engaging in anti-competitive practices. The CCI found that these companies had entered into exclusive arrangements with cinema owners, restricting their ability to source digital content delivery services for DCI-enabled screens from competing vendors. There is, however, no order against charging of Virtual Print Fee (VPF) by the CCI.
KEY DIRECTIVES FROM CCI
Content Compatibility Mandate: Content mastering and delivery service provider of DCI content like Prime Focus can provide content delivery services going forward for UFO and Qube screens which are enabled with DCI equipment.
Modification of Existing Agreements: The CCI directed that existing lease agreements with cinema owners be modified to remove restrictions on the supply of content from parties other than UFO Moviez and Qube.
The case before the CCI was filed by Prime Focus as, like UFO and Qube, it is also a service provider and found that its business was being affected because of the restrictive clause put in the agreement by UFO and Qube, which made it mandatory for cinemas to source content only from UFO or Qube. Although the defendants argued before the CCI that Prime Focus could provide content to cinemas other than the ones which used UFO or Qube DCI equipment on lease basis, the CCI held it guilty of indulging in anti-competitive practices.
UFO and Qube have preferred an appeal before the National Company Law Appellate Tribunal (NCLAT).
