CCI Launches Investigation into PVR INOX for Alleged Abuse of Dominance Over VPF Fees

The Competition Commission of India (CCI) has initiated an investigation into PVR INOX, a major multiplex chain, for allegedly misusing its dominant market position. The probe concerns the continued imposition of a virtual print fee (VPF) on producers, despite the complete transition to digital projection in cinemas. This decision follows a complaint by the Film and Television Producers Guild of India Ltd.

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Allegations of Unfair Practices

The Guild claims that the VPF, originally meant to support the shift from analog to digital cinema, is now an unnecessary financial burden on producers, especially smaller ones. They argue that the fee's purpose has expired with full digitisation. CCI's 33-page order highlights a prima facie case against PVR INOX under Section 4 of the Competition rules, which addresses abuse of dominant position.

Market Dominance and Discrimination

PVR INOX holds a significant share in India's film exhibition market, controlling about 30% of multiplex screens and box office revenues. The CCI noted that PVR INOX's practice of waiving VPF for certain Hollywood studios while charging smaller filmmakers appears discriminatory. This could potentially breach Section 4 by imposing supplementary obligations without offering distinct services.

Defence and Investigation

PVR INOX justifies the VPF by citing high costs associated with digital cinema equipment, which needs replacement every 8-10 years. They argue that eliminating the fee would force them to increase ticket prices. Despite this defence, the CCI has tasked its Director General (DG) with completing the investigation within 90 days.

Further Examination Required

The DG will also assess the involvement of PVR INOX's responsible officers under Section 48 of the Act. The CCI clarified that its current observations are preliminary and not a conclusive judgment on the case's merits. This investigation aims to ensure fair competition practices in India's film industry.

With inputs from PTI