The Competition Commission of India (CCI) has levied a cumulative penalty of ₹2.69 crore on UFO Moviez, its subsidiary Scrabble Digital, and Qube Cinema Technologies for engaging in anti-competitive practices that adversely affected competition in India’s digital cinema exhibition market.
Anti-Competitive Practices
The CCI found that UFO Moviez and Qube Cinema Technologies, significant players in the digital cinema equipment leasing market with 40% and 48% market shares respectively, entered into exclusive agreements with cinema theatre owners (CTOs). These agreements restricted CTOs from sourcing digital content and related services from competing vendors, thereby limiting consumer choice and foreclosing competition ¹.
Tie-in Arrangements and Exclusive Supply Agreements
The investigation revealed that UFO Moviez and Qube Cinema bundled the lease of digital cinema equipment with exclusive content delivery services, constituting tie-in arrangements. CTOs leasing equipment from these companies were contractually barred from sourcing content from other providers. This practice created barriers to entry for newer players in the post-production processing market and drove out existing competitors ¹ ².
CCI Directives
Beyond financial penalties, the CCI has issued specific directives to address the anti-competitive behavior:
– Cease and Desist: UFO Moviez and Qube Cinema must refrain from entering into lease agreements with CTOs that impose restrictions on the supply of content from other parties.
– Modify Existing Agreements: Existing lease agreements with CTOs will stand modified to remove restrictive clauses.
Penalty Details
– UFO Moviez and Scrabble Digital: ₹1.04 crore
– Qube Cinema Technologies: ₹1.65 crore
The CCI’s order aims to promote competition in the digital cinema exhibition market and prevent similar anti-competitive practices in the future. By imposing penalties and directing companies to modify their agreements, the CCI seeks to ensure a level playing field for all market participants ¹ ³.