Fair and reasonable terms to producers for promotions, by sharing the costs of promotion, may be considered by multiplexes, stated Competition Commission in a market study report on the film distribution chain in India.
The regulator has proposed self-regulations related to multiplexes and producers, Virtual Print Fee (VPF), stakeholders’ associations and digital cinema.
According to CCI, In place of standard templates for contracting, tailor made arrangements are preferred. For revenue-sharing, aggregate agreements may be preferred over existing sliding scale arrangements, where multiplexes and producers can share the aggregate revenues generated by a film based on a pre-negotiated percentage split between the parties.
“Multiplexes should refrain from any restraint on trade in exhibition that may impinge on producers’ freedom of trade,” stated CCI.
In terms of reporting of box office revenue collections, the regulator said, Adoption of box office monitoring systems to generate, record, and maintain ticketing logs and reports, and the data collected by such a system should not be alterable by any stakeholder. Producers should empanel independent auditors to check such monitoring systems and ensure that they are working properly and not being tampered with.
According to the regulator, Virtual Print Fee (VPF) paid to multiplexes can be phased out first. VPF for single-screens can be phased out more gradually, given their dependence on a VPF-driven lease model for digital cinema equipment. Till the VPF sunset is decided and implemented, Digital Cinema Equipment (DCE) providers and producers should negotiate on mutually acceptable VPF charges and ensure that there are no disruptions in the exhibition of films on account of VPF.
Stakeholders associations must refrain from engaging in bans and boycotts and prohibiting industry from working with non-members. In addition, associations should not engage in any of the other conduct that has previously been found to be anti-competitive by the Commission.
“Associations must consider how alternate dispute resolution mechanisms such as mediation can be institutionalised to address any disagreement between stakeholders. Associations are advised to conduct events educating their respective members about the awareness of competition law and the consequent need for competition compliance,” CCI stated.
Agreements that digital service providers enter with exhibitors or producers, as the case may be, should have scope for negotiations for reducing bargaining power imbalance. Also, long term agreements with one sided clauses can be avoided.
The CCI appreciated the cooperation extended by various stakeholders by giving their valuable insights into the various aspects of the film production, distribution and exhibition. The CCI also conveyed its earnest hope that anticompetitive practices will be contained by the constituents in the best interest of all, thus limiting regulatory interference.
