By way of a December 29 2017 order, the Competition Commission of India (CCI) initiated an investigation into Star India Pvt Ltd for alleged violation of Section 4(2)(a)(ii) of the Competition Act 2002 following claims filed by a private multi-system operator (MSO) engaged in the business of cable TV distribution in the state of Kerala.

Facts

Claimant Thiruvananthapuram Entertainment Network (P) Ltd alleged that Star India had engaged in anti-competitive behaviour and abuse of a dominant position by charging the claimant excessive licence fees compared to the fees that it charged the claimant's competitors and other Kerala MSOs, including:

  • Kerala Communicators Cable Limited (KCCL);
  • Asianet Cable Vision; and
  • DEN Networks Limited.

Thiruvananthapuram submitted evidence that on July 1 2014 it had entered into an agreement with Star India for subscription to 19 of its 39 channels, under which the licence fee was Rs111,248.12 for around 22,000 connections (approximately Rs5.06 per connection). In comparison, Thiruvananthapuram claimed that KCCL, which had 25 connections, was paying approximately Rs4.40 per connection during the same period.

On December 28 2015 Thiruvananthapuram executed two six-month licensing agreements in regard to 20 Star India channels, under which the licence fee increased to:

  • Rs115,063 (approximately Rs5.23 per connection) for the period between July 1 2015 and December 31 2015; and
  • Rs147,510 (approximately Rs6.70 per connection) for the period between January 1 2016 and June 30 2016.

However, during the same periods, KCCL was paying approximately Rs5 per connection.

Further, Thiruvananthapuram claimed that on expiration of the December 28 2015 agreements, Star India forced it to execute a new agreement covering 20 channels at a higher rate of:

  • Rs177,000 per month (approximately Rs8 per connection) for the period between July 1 2016 and December 31 2016; and
  • Rs312,500 per month (approximately Rs14.20 per connection) for the period between January 1 2017 and June 30 2017.

Thiruvananthapuram claimed that Star India had threatened to discontinue the major sports and regional channels if these rates were not paid. Therefore, Thiruvananthapuram had no other option and was coerced to enter into the agreement at the higher rates for a further 12 months.

However, by the time the CCI concluded its prima facie review, Thiruvananthapuram had requested to withdraw its complaint on the grounds that Star India had resolved the dispute and agreed to reconsider the tariff rates. Nevertheless, by way of an August 17 2017 order, the CCI rejected Thiruvananthapuram's request on the grounds that CCI inquiries need not be driven by the claimant, and decided to proceed with the matter under its suo motu powers of inquiry.

Decision

The CCI ordered the director general to open an investigation into Star India considering the following observations:

  • The relevant market in the case is the provision of broadcasting services in the state of Kerala.
  • Star India appears to be in a position of strength in the relevant market. Further, the price discrimination between various MSOs must be investigated under Section 4(2)(a)(ii) of the Competition Act.
  • If the director general identifies further conduct by Star India (in addition to that highlighted in the claim) which violates the Competition Act, it must investigate such conduct without restricting itself to the period outlined in the claim.
  • The director general must investigate the role (if any) of any Star India individuals or officials who may have been responsible for the conduct of the business at the time of the alleged violation.
  • The CCI's jurisdiction supports that of the Telecom Regulatory Authority of India (TRAI). Therefore, the CCI's powers are in addition to, and not in derogation of, the TRAI's mandate to regulate the practices of broadcasters in the concerned sector. The scope of the CCI's powers under the Competition Act and that of the TRAI's powers under the Telecom Regulatory Authority of India Act 1997 are distinct in terms of the investigation process and the remedies that may arise from a violation of the respective acts.

For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (mmsharma@vaishlaw.com). The Vaish Associates website can be accessed at www.vaishlaw.com.

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