MOOT COURT PROBLEM COMPETITION LAW CLAW 229

Colere is a federal democratic republic located in South Asia. There are 10 states in Colere. The
laws of Colere areparimateria to the laws of India. Colerian is the national language of Colere
,however, the duty of the state to protect all indigenous languages is enshrined in the
Constitution of Colere. Apart from Colerian which is the most spoken language in the country,
there are 5 other recognized languages in the country namely: Madyan, Ghurani, Fhreni, Gharn,
and Ruian. All these languages are specific to the states of Madya, Ghura, Fhre, Ghar, and Rui
respectively.

Colere is a culturally rich country with art and music being a big part of the colere lifestyle.
Cinema has been, for a long time, the biggest platform for the expression of art. The cinema
industries of Colere produces more than 200 movies every year, about 70% of which is produced
in colerian. About 6% of the total movies are produced in each of the other 5 recognized
languages.

Jackie Cruz is one of the biggest stars in Colerian film industry. Jackie Cruz is a 70%
shareholder in the company named ‘Jackie Cruz Films Pvt. Limited’ (JCFL) which produces at
an average 10 movies every year. The movie produced by JCFL generally grosses more than 10
billion Colerian Dollars (the official currency of Colere) as against the total Colerian film
Industry average of 4 billion. Naturally, the movies occupy the theaters for more weeks than any
other movie.

Mr. Taran, Mr. Chris, and Mr. Chan are other prominent actors of Colerian film industry. Mr.
Taran works in cinema in all languages of Colere and is the most sought-after actor in movies
made in all languages of Colere other than Colerian. He acts in,at an average, more than 10
movies across the languages 40% of which is in Colerian. Mr. Chris is another prominent actor
who acts primarily in Colerian Language movies. Mr. Chris also owns 30% shares in JCFL.
Chris also has his own company in which he has 99% shares named ‘The Big Show Pvt. Ltd’.
Big Show is the largest multiplex chain in the country. It has30 multiplexes with 100 screens.
Apart from Big Show, there are 10 other multiplexes with 30 screens combined and 100 single-
screen theaters.
Mr. Chan is an upcoming actor who has made quite an impact with his movies. He has acted in 5
movies in the last three years all of which have been blockbusters. His impact across the nation
has been such that the movie theatres kept his movies running for months together on popular
demand. Because of the same JCFL stated to suffer losses. To recover the losses Mr. Chris
dedicated all the screens in its multiplexes to movies made by JCFL only. Additionally, to ensure
profitability to its multiplexes Big Show entered into an exclusive distribution agreement with
JCFL regardingits movies.

Given the fact that the number of movies made by Mr. Chan was far and few, this agreement
proved to be detrimental to the interest of the other multiplexes and single-screen theaters. Later,
at request of the theater owners JCFL agreed to showcase their movies in other cinema halls on
the condition that at the time of releases of films by JCFL or Mr. Chris, the theaters will not
show other movies for 2 weeks from the date of such release.

This made it difficult for the film producers to engage Mr. Chan in their movies.Mr. Chan moved
to the Competition Commission of Colere (CCC) against JCFL, Mr. Taran, and Mr. Chris for
entering into anti-competitive agreements. CCC found that there is a prima facie case and
ordered an investigation into the agreements.

Meanwhile, In the year 2019, a deadly disease ‘COVID-19’ affected people and businesses alike.
All the theaters were locked down. Over the Top (OTT) platforms suddenly became preferred
medium of release of the movies. Zaidu, Unfilmy and MovieEra were the only three OTT
platforms available in Colere. Zaidu was a product of the company “AlphaDelta” which had 70%
of the total subscribership. Unfilmy had 30% of the total subscriber while MovieEra did not
work on subscribership model and worked on advertisement revenue sharing model.

AlphaDelta also had a social media platform called ‘Heartbook’. Heartbook was the most
popular social media platform in Colere. Over 90% of the people who were using OTT platforms
for watching movies were on Heartbook.

JCFL has acquired 10% of the total shares of AlphaDelta. Along with the shares JCFL also has
acquired Veto rights1 over contents to be published on Zaidu platform. AlphaDelta also has a
landing page for Zaidu on Heartbook which allows the users to go to the Zaidu page directly
1
Veto power gives an entity the power to reject a proposal even in case where the proposal enjoys
the support of the majority.
from Heartbook. Heartbook allows its users to publish their reviews of the movie only through
the Zaidu Platform.

JCFL has, using its Veto power disallowed any movie of Mr. Chan for being unsuitable for the
users of the platform especially the children. The reason given for this decision is vulgarity in the
movies of Mr. Chan which includes nudity, abusing language, adult content among others.

The Director-General in his report has pointed out that the vertical agreement between the
Cinema Theater owners including ‘The Big Show’ and JCFL did not result in Appreciable
Adverse Effect on Competition in Colere. This was because despite the agreements other
producers were able to get releases on their films and despite being the highest-grossing
production house, the number of movies released by JCFL accounted for only 20% of the total
number of films released. However, The DG noted that the use of Veto power by JCFL
constitutes Abuse of Dominant Position. For the same, the DG has delineated the market as all
the OTT platforms.

The CCC, based on the report by the DG, has ruled that JCFL has abused their dominant position
and ordered to rescission(CANCELLATION OF CONTACT) of the Veto rights.

Both JCFL and Mr. Chan have gone on appeal to the National Company Law AppellateTribunal
against the order of CCC. NCLAT has clubbed the matter and will hear it together.

The counsels for the purpose of this moot court will represent JCFL and Mr. Chan. The issues in
the matter relating to the existence of Anti-Competitive Agreements, Abuse of Dominant
Position, and Validity of the Inquiry report by DG.