Competition Commission rules in favor of DCI

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An Indian company and digital-cinema provider K Sera Sera recently accused Digital Cinema Initiatives (DCI) of indulging in anti-competitive activities under Section 3 of the Competition Act, 2002. DCI is a conglomerate of companies, such as The Walt Disney Company India, Fox Star Studios, NBC Universal Media Distribution Services, Sony Pictures, Warner Bros and Paramount Films India. The complaint was filed with the Competition Commission of India (CCI).

After going through the allegations, CCI, however, disagreed with K Sera Sera. It held that there was no violation of Section 3 by DCI and the group was not at fault in insisting that its terms and conditions be complied with.

As a digital-cinema service provider, K Sera Sera has its own technology, known as Sky Cinex Technology, and it screens films across 300 halls in India. The company claims that the technology is as good as or even better than that of DCI.

According to the complaint from K Sera Sera, DCI insists that films made by the group must be screened only through Digital Cinema Initiative compliant servers and projectors, known as DCI-compliant. 

Recently K Sera Sera was unable to screen the American superhero film, Avengers: Age of Ultron as it did not have DCI-compliant servers and projectors.

K Sera Sera also claimed in its complaint that it could not show many Hollywood films in India as it did not have DCI-compliant equipment, and as a result, was being edged out of the competition. It alleged that DCI operated as a cartel and the cost to the cinemagoer increased as movie-hall owners had no option but to install the expensive DCI-compliant equipment.

The Commission, in its decision against K Sera Sera pointed out that the company was doing very well and had in fact entered into a joint venture with United Media Works to become the third largest digital cinema integrator in India.  Therefore, it did not appear that its business growth was being affected due to DCI.

The Commission also observed that in India Bollywood movies are watched more often than Hollywood cinema and K Sera Sera was doing very well in that area.

It further pointed out that K Sera Sera had entered the cinema market in 2010-11 after being well aware about DCI and its requirements but chose not to install the DCI-compliant equipment for so many years. The Commission felt that K Sera Sera should have done so if it was interested in showing Hollywood movies in India.

The Commission held that DCI’s need to protect piracy of its films was very important and falls under the protection of Section 3(5) of the Competition Act, 2002. Section 3(5)(i)(a) of the Act clearly provides “that application of Section 3 shall not restrict the right of any person to impose reasonable conditions as may be necessary for protecting any of its rights conferred upon him under the Copyright Act, 1957”.

On K Sera Sera’s charges that consumers were being deprived of movie choices, the Commission observed that this did not appear to be the case. Consumers have a large number of movies as well as movie theatres to choose from, it contended.

The Commission also found that K Sera Sera was unable to provide any evidence to back up its charge of anti-competitive activities under Section 3(4) of the Act, nor was it able to substantiate its charge of abuse of dominance under Section 4 of the Act.

India Legal Bureau

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