Holding that the Competition Commission of India (CCI) “is a market regulator and has the jurisdiction to look at all issues affecting competition in the market”, the CCI recently penalized Super Cassettes Industries – the owner of the T-Series brand, which controls over 70% of new Bollywood music – for abuse of dominance.
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Ruling in M/s HT Media Limited v M/s Super Cassettes Industries Limited, the CCI found that the imposition of a minimum commitment charge on private FM radio stations is an abuse of dominance under section 4(2)(a)(i) of the Competition Act, 2002. Section 4(2)(a) stipulates that there is an abuse of a dominant position if the dominant enterprise imposes unfair or discriminatory conditions in the sale or price of goods or service.
Super Cassettes had unsuccessfully argued before both the CCI and Delhi High Court that as the case involved a licence of rights, which cannot be considered to be goods or service, it did not fall under the purview of section 4 of the Competition Act. Instead, the appropriate authority to address the grievances of HT Media was the Copyright Board.
HT Media had filed a complaint with the CCI in 2011. It submitted that radio stations were running into losses and therefore imposing exorbitant royalties and a minimum commitment charge made it unviable for them to sustain let alone make profits. Furthermore, the minimum commitment charge adversely affected competition as it restricted their ability to license music of other owners.
To ensure that “the threat of penalties will deter both the infringing undertakings and other undertakings that may be considering anti-competitive activities from engaging in them”, the CCI ordered Super Cassettes to pay a penalty of 8% of its average turnover of the past three years. (See Turf wars on for more on this ruling.)
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
