CIA – III

COMPETITION LAW

CASE ANALYSIS ON AAMIR KHAN PRODUCTIONS v. UNION OF INDIA

SUBMITTED TO: SUBMITTED BY:

Mrs. Chaitra Rangappa Beerannavar Sai Kalyani S 1950360

School of Law, Christ (Deemed Jagruthi Rao 1950373
to be University) 9 BA LLB C
 AAMIR KHAN PRODUCTIONS v. UNION OF INDIA

(2010 SCC OnLine Bom 1226)

INTRODUCTION TO THE BACKGROUND OF THE CASE

Competition law and Intellectual Property law, despite serving distinct objectives, often find
themselves in a contentious relationship, necessitating a thorough analysis to resolve emerging
issues effectively. While Intellectual Property laws grant temporary rights to property holders,
enabling them to exclude others from using their creations, these rights essentially bestow a
limited-term monopoly on the holder. Conversely, Competition law is designed to prevent anti-
competitive practices and mitigate the potential misuse of such monopolistic power sanctioned
by Intellectual Property statutes. It is imperative to strike a delicate balance, ensuring that
Intellectual Property laws are not exploited through practices like excessive pricing,
anticompetitive tying, or refusal to license, while also safeguarding the incentives for innovators
to create intellectual property. The Competition Act, 2002, in its provisions, has shown a
willingness to accommodate the principles of Intellectual Property laws without entirely
undermining the dominance acquired through such rights. Therefore, it is essential to adopt a
harmonious approach in constructing and interpreting both sets of statutes.
The central inquiry in this context pertains to whether Intellectual Property Rights fall within the
purview of Competition law. The indications from both the provisions of the law and the legal
precedents established by Indian courts imply that Intellectual Property Rights are not granted an
automatic immunity from the authority of the Competition Commission of India.

PRIMARY DETAILS OF THE CASE

Case No. Writ Petition No. 358 of 2010

Jurisdiction High Court of Bombay
Case Decided on August 18, 2010
Judges Justice Mohit S Shah and Justice SC Dharmadhikari
FACTS OF THE CASE

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The FICCI-Multiplex Association of India, represented by Luthra & Luthra, Law Offices in New
Delhi, lodged a complaint under Section 19(1) of the Competition Act, 2002, on May 26, 2009.
They brought forward allegations against the following entities:
1. United Producers/Distributors Forum (UPDF)
2. Association of Motion Pictures & T.V. Programme Producers (AMPTPP)
3. The Film & Television Producers Guild of India Ltd. (FTPGI)
The complaint asserted that members of these organizations were engaged in activities
resembling cartel behaviour, which violated the provisions of Section 3(3) of the Competition
Act, 2002. It was further claimed that these associations and enterprises, collectively controlling
nearly 100% of the market share for the production and distribution of Bollywood Motion
Pictures exhibited in Multiplexes, had formed an alliance under UPDF. This coalition had
collectively decided to withhold film releases to Multiplexes starting from April 4, 2009, with the
aim of negotiating higher revenue sharing ratios from the complainant's members. This alleged
cartel-like conduct was deemed to have a significant adverse impact on competition within India.
In response, the Commission acknowledged the matter under Section 19 of the Act. Upon
forming an initial opinion under Section 26(1) that a prima facie case existed, the Commission
issued directives for the Director General (DG) to initiate an investigation into the matter.
FINDINGS BY THE DG – DG REPORT

According to the findings of the Director General (DG), it has been determined that the
individuals mentioned in the DG's report collaborated to establish a cartel. Their primary aim
was to secure a more favourable revenue sharing arrangement for film supply to Multiplexes. To
achieve this goal, they engaged in practices that restricted and controlled the availability of films
in the market. This was achieved by their deliberate refusal to release films for exhibition in
Multiplexes. Consequently, their concerted efforts were successful in increasing their revenue
sharing ratio. As a result of these actions and activities, it has been established that they violated
the provisions outlined in Section 3(3) of the Competition Act, 2002.
The petitioners approached the High Court of Bombay and have contested the authority of the
Competent Commission to initiate proceedings under the Competition Act against them, citing
the following key arguments:

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 1. They argue that the exhibition of a feature film, which falls under copyright exploitation,
is explicitly excluded from the purview of Section 3(5) of the Competition Act.
Therefore, the proceedings initiated against them lack jurisdiction.
2. They assert that sending notices to the petitioners who are not individual film producers,
is also beyond the Commission's jurisdiction and reflects a lack of careful consideration.
3. The petitioners deny any delay or withholding of film releases to multiplexes, as alleged
in the report. They claim to have participated in meetings with other film producers to
address issues such as disputes over revenue sharing, improper deductions by multiplex
owners, payment delays, and non-payment by multiplex owners to producers/distributors.
They argue that multiplex owners were acting collectively against the
producers/distributors.
4. They contend that during negotiations, the term "United Producers/Distributors Forum
(UPDF)" was coined to describe the negotiating producers, but UPDF was not a
registered entity and did not represent all film producers.
5. The petitioners state that the disputes between multiplex owners and Hindi feature film
producers were resolved around June 2009. Subsequently, individual producers signed
agreements with individual multiplexes, and films were released through multiplexes.
Therefore, they argue that the allegations and the show cause notices have become
irrelevant, as there are no remaining grievances to investigate.
6. The petitioners also claim that the information received by the respondents from FICCI-
Multiplex Association of India, which led to the case against them, was not disclosed to
them.

PROVISIONS INVOLVED

The Competition Act, 2002

 Section 3(3)
 Section 3(5)
 Section 4
 Section 19(1)
 Section 26(1)

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 ISSUE INVOLVED

Whether the CCI has jurisdiction to deal with Intellectual Property Cases?

ARGUMENTS

PETITIONER

 Section 3(1) of the Competition Act, 2002 prohibits an anti-competitive agreement in respect
of production, supply, distribution, storage, acquisition or control of goods or provision of
services, which causes or is likely to cause an appreciable adverse effect on competition
within India. Releasing of a movie cannot be considered as goods and services under this
section. Hence, the competition Act will not be applicable to disputes that are arising out of
distribution rights with respect to films.

 Cinematograph films are granted copyright under Section 13(1)(b) of the Copyright Act of
1956, and Section 14(1)(d)(ii) states that copyright refers to the exclusive right to make, do,
or authorise the making of, sell, give on hire, or offer for sale or hire any copy of the movie,
regardless of whether such copy has been made, sold, or given on hire previously, and under
Section 14(1)(d)(iii) to communicate the movie to the public. The decision of who will
receive a copy of the film to be used in distributing it to the public is solely up to the
discretion of the film's producer. The copyright holder is granted the ability to delegate their
rights under Section 18 to any person either wholly or partially. Unless the owner of the
copyright has granted the rights or given a written licence and granted interest in the right by
licencing any right to a third party, the only other permitted way for any person to acquire
any right in respect of such copyright is by filing a complaint with the Copyright Board under
Section 31 and convincing the Copyright Board that the necessary conditions have been met.
He has the exclusive right to sell or give on hire any copy of the film. According to Section
31, if a complaint is made to the Copyright Board alleging that the film's copyright owner has
refused to permit a public performance a reasonable opportunity of being heard will be given
to the owner of the copyright in the work a reasonable opportunity to be heard and after

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 holding an inquiry, the Copyright Board may direct the Registrar of Copyright to grant the
complainant a licence if it is satisfied that the grounds for such refusal are not reasonable. By
reason of such refusal, the work is withheld from the public or has refused to allow the
communication to the public, such work on terms that the complainant considers reasonable.

Music Choice India Pvt. Ltd. v. Phonographic Performance Ltd.,1 is relied upon in
support of the contention that it is the Copyright Board alone which has the exclusive
jurisdiction to grant compulsory licence to a complainant under Section 31 of the
Copyright Act and that no other Court or Commission can grant such a right to a third
party. It is submitted that the Competition Commission does not have and cannot have
jurisdiction to grant something which would frustrate the provisions of the Copyright Act
and that Legislative intent is more than clear from sub-section (5) of Section 3 of the
Competition Act,2002.

 The owner of the copyright will be able to prevent any infringement of his rights under the
Copyright Act and impose any reasonable conditions that may be required by doing anything
that is not in compliance with the aforementioned legislative framework of the Copyright Act.
Therefore, it is evident that the Competition Commission lacks the authority to start any legal
actions that would infringe on the Copyright Act rights of the owner of the copyright to the
cinematograph film. The Competition Commission is presumed to have such authority in the
contested show cause notices. As a result, the contested show cause notifications were issued
without any legal authority and without any jurisdiction.

DEFENDANT

 According to the argument put forward by the defendants, the petitions are premature
because the case is still in the show cause notice phase. The Competition Commission has the
authority and responsibility to make decisions regarding every point raised in petitions and
letters written on petitioners' behalf. The petitioners have taken part in the procedures before
the Competition Commission, and they have already said that they want to respond to the
show cause notices. They have also asked the Competition Commission to hold a hearing.

1
Appeal No. 150 of 2009 in Suit No. 2124 of 2007

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 The petitioners are now precluded from objecting in any way to the stated proceedings
because they have unambiguously appeared before the Competition Commission and
recognised the jurisdiction and power of the Commission to proceed in the matter in
accordance with the said notifications.

JUDGEMENT AND ANALYSIS

The court determined that no one's ability to file a lawsuit for infringement of a patent,
copyright, trademark, etc. is restricted by Section 3(5) of the Competition Act, 2002. Before the
CCI, all defences that may be raised before the copyright board may also be raised. As a result,
the application of other laws is not prohibited by the competition law.
 Section 61 provides for exclusion of jurisdiction of civil Courts in respect of any matters
which the Commission or the Appellate Tribunal is empowered by the Competition Act to
determine.
 Section 60 gives the Act overriding effect over other laws.
 Section 62 – Application of other laws not barred — “The provisions of this Act shall be in
addition to, and not in derogation of, the provisions of any other law for the time being in
force.”
The Apex Court then stated as under in the case of Chaube Jagdish Prasad and another v.
Ganga Prasad Chaturvedi2 :
“These observations which relate to inferior Courts or tribunals with limited jurisdiction show
that there are two classes of cases dealing with the power of such a tribunal where the legislature
entrusts a tribunal with the jurisdiction including the jurisdiction to determine whether the
preliminary state of facts on which the exercise of its jurisdiction depends exists and where the
legislature confers jurisdiction on such tribunals to proceed in a case where a certain state of
facts exists or is shown to exist. The difference is that in the former case the tribunal has power
to determine the facts giving it jurisdiction and in the latter case it has only to see that a certain
state of facts exists.”

2
AIR 1959 SC 492

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The court also noted that CCI has not yet made a decision and that the case is still in the inquiry
stage. If the final judgement of the CCI is against the petitioners, they have the right to appeal in
COMPAT. The court ultimately decided that CCI had the authority to handle IPR proceedings.
What can be contested can also be contested before the copyright board.

CONCLUSION AND CONTEMPORARY RELEVANCE

The purpose of intellectual property laws is to strike a balance between the exclusive rights of
the author and the greater good. Contrarily, competition law focuses on preventing monopolies
and unfair advantages to give customers more choices and higher-quality goods at lower prices.
One must remember that while competition law is a set of regulations, intellectual property rights
are a set of rights that grant rights. IPR attempts to safeguard the rights of the inventor and
owner, whereas competition law acts as a hand that regulates the market. As a reward and
incentive, the government provides the inventor exclusive rights.

For a set period of time, the inventor is free to profit financially from his invention. IPR and
competition laws may initially appear to be at odds with one another, but as the analysis
presented above demonstrates, they really serve one another to accomplish a common aim.

The goal of competition law is to give consumers a wide range of options while balancing those
against the rights of producers and sellers. Consumers must have access to high-quality goods at
reasonable rates, as well as a range of options, for the greater good of society. The goal of IPR is
to give the manufacturer credit for being an innovator. The objective of both laws can be
understood through a harmonious construction to define the balance between the two. Both these
laws cannot achieve their objective separately but need to be understood through the lens of
similarity, for them to accomplish what they intended.