The Cone of Anti-Competitive Behavior in India’s Film Industry

In recent months, the Competition Commission of India (CCI), following Section 27 of the Competition Act 2002, imposed sanctions on UFO Moviez and Qube, a subsidiary of UFO Moviez, for their anti-competitive conduct. These companies, known as UFO Moviez and Scrabble Digital Ltd., were found to restrict content supply in lease agreements with CTOs, creating barriers for other players in the post-production processing sector. The CCI determined that this was a violation under Section 3(4) of the Act, resulting in CCC suspension of operations and refusal to engage in dealer deals.

What is UFO Moviez?

UFO Moviez is a well-known film production company, primarily known for its compelling stories, vibrant styling, and global reach. The term “UFO” was used in the headline due to some confusion with a real company, which later became Resonance Media & Entertainment, another prominent film production house.

Their Actions Leading to CCC Decision

• Restricting Content Supply: UFO Moviez and their subsidiary, Scrabble Digital Ltd., imposed restrictions on content supply through lease agreements with CTOs. This led to the suspension of PPP services by other players.
• Barriers to Supply Chain Management: Their actions disrupted supply chain management, hindering a significant portion of CTOs from accessing services.

The CCI’s Decision

The CCI assessed UFO Moviez and Qube for their contravention of Section 3(4) of the Competition Act. It noted their nature (significant market players), gravity of the issue, and mitigating factors, concluding that they were in immediate contravention.

Penalties and Significance

• Penalties: Rs. 104.03 lakh for UFO Moviez and Rs. 165.8 lakh for Qube. These amounts reflect the severe penalties imposed on violating competitive regulations.
• Broader Impact: Their actions raised concerns about unfair practices affecting other film companies, potentially disrupting a competitive landscape in India.

Broader Implications

While UFO Moviez may not contribute directly to movies, their conduct disrupts supply chain management and distribution, impacting multiple players. Such sanctions highlight the importance of maintaining fair competition for all businesses, even fictional ones, to ensure a resilient market environment.

Conclusion: Future Outlook

The CCI’s decision reflects a broader trend in anti-competitive behavior in India’s film industry, where companies are forced into a competitive race. Such actions demonstrate the need for maintaining a robust, transparent, and fair market environment to protect other businesses while fostering innovation and creativity in production.