Cassettes

Cassettes

AdobeSpark

Case note - Super Cassettes

A case study of M/s HT Media Limited (Informant) And M/s Super Cassettes Industries Limited (Opposite Party)
1.

Title: In Re: M/s HT Media Limited (Informant) And M/s Super Cassettes Industries Limited (Opposite Party)[1]

Date of the Order: October, 1, 2014.

CORAM: Mr. Ashok Chawla (Chairperson), Mr. M. L. Tayal (Member), Mr. S. L. Bunker (Member)

Issues:

1. Whether the Competition Commission of India (CCI) had the valid jurisdiction to hear the dispute;

2. Has Super Cassettes abused its dominant position under Section 4(2)(a)(i) of the Competition Act, 2002 (the Act).

Relevant Law: The Competition Act 2002.

Grounds of Challenge:

Issue 1: The Opposite party filed an application before the CCI challenging its jurisdiction to hear the matter on the grounds that the Copyright Board was hearing a compulsory licensing application filed by HT Media, which was going to decide the very same issue, i.e. were the rates set by T-Series unreasonable.[2]

Issue 2: The informant had alleged that Super Cassettes had abused its dominant position on three grounds, namely: by (i) charging of excessive amount as license fees (ii) imposing Minimum Commitment Charges (MCC) to be paid to the opposite party per month irrespective of actual needle hour of broadcast of the opposite party’s music content by the informant and (iii) making conclusion of licensing arrangements with the opposite party subject to the acceptance of license fees and MCC imposed by them.

Decision:

Issue 1: The CCI dismissed the application without a hearing after which the opposite party moved the Delhi High Court via a writ petition (W.P. 1119 of 2012) in February, 2012.

The Delhi High Court disposed the writ petition, in October, 2012 after ordering CCI to hear the jurisdiction issue raised by the opposite party as a preliminary objection before hearing the dispute on merits. CCI after hearing the preliminary objections regarding its jurisdiction ruled against the opposite party and held that it was competent to hear HT Media’s complaint against the opposite party despite the proceeding before the Copyright Board.

Issue 2: CCI identified the relevant market to be the ‘market for licensing of Bollywood music to private FM radio stations for broadcast in India’. In the said relevant market the Commission found Super Cassettes to be in dominant position as it had the strength to operate independently of competitive forces and affect its competitors and customers in its favour. Compared to its competitors in terms of revenue, acquisition of movies and ownership of popular content, Super Cassettes was in a superior position as its revenue was 4-5 times of its nearest competitors and its market share was found to be more than 50%. Due to the ownership of popular content, its customers heavily depended on it and the superior financial strength in the market coupled with superior resources indicated towards its dominant position. The CCI also found substantial barriers to entry which made it impossible/ more difficult for a firm to enter the market.

CCI ruled that Super Cassettes had abused their dominance by forcing the condition of MCC on its customers. The Commission noted that MCC, irrespective of whether it was 30% or 50%, was exploitative and exclusionary in nature because it forced the customers to pay for music that they may not play. The CCI rejected the argument of Super Cassettes that the MCC is not exploitative as radio stations in any event broadcast the pre-determined amount on the grounds that it was a misleading statement giving evidence to the contrary.

The charge of excessive pricing was however not proved against Super Cassettes. The Commission held that in the absence of the cost data it would be almost impossible to term the price charged by the opposite party at 661 INR per needle hour as unfair simply because it was higher than the price charged by other competitors.

The CCI did not deal with the issue of performance License fees as the matter that that time was still under consideration before the Supreme Court.

The Order: CCI imposed a penalty on the opposite party at the rate of 8% of average turnover of the last three years of the company amounting to Rs. 2,83,28,000 for abuse of dominant position under Section 4(2)(a)(i) of the Act, by imposing unfair condition of MCC on private FM radio stations.

Directing Super Cassettes to (i) cease and desist from formulating and imposing the unfair condition of MCC in its agreements with private FM radio stations in India and (ii) to suitably modify the unfair condition of MCC imposed on private FM stations in India in the existing agreements within 3 months.

[1] See http://www.cci.gov.in/May2011/OrderOfCommission/27/C-2011-40.pdf.

[2] The Competition Commission tightens the ‘noose’ around T-Series, available at:

<https://spicyip.com/2013/04/the-competition-commission-tightens.html>, accessed on: 30/01/2022.

Related Stories

No stories found.
Lex Legacy Bloc
lexlegacybloc.com