The Competition Commission of India (CCI) has levied a total penalty of Rs 2.69 crore on UFO Moviez, its subsidiary Scrabble Digital, and Qube Cinema Technologies for engaging in anti-competitive practices that affected competition in India’s digital cinema exhibition market.
As per media reports, the Commission found the companies guilty of violating Sections 3(1) and 3(4) of the Competition Act, 2002, for their involvement in tie-in arrangements, exclusive supply agreements, and refusal to deal. A joint penalty of Rs 1.04 crore was imposed on UFO Moviez and Scrabble Digital, while Qube Cinema faced a separate fine of Rs 1.65 crore.
The case stems from a 2020 complaint filed by PF Digital Media Services and film producer Ravinder Walia, alleging that UFO Moviez was disabling its leased equipment to prevent the exhibition of films that had not undergone post-production processing by Scrabble Digital.
The informants claimed this conduct amounted to denial of market access and abuse of dominance. A civil suit initially filed before the Delhi High Court was subsequently withdrawn in order to file formal information with the CCI. In September 2021, the CCI directed its Director General to carry out a detailed investigation.
Following a detailed investigation, the DG found that UFO Moviez and Qube Cinema Technologies held substantial market power in the segment of Digital Cinema Equipment (DCE) leased to Cinema Theatre Owners (CTOs), with market shares of approximately 40% and 48% respectively.
As per media reports the regulator said in a statement, “The Commission found that UFO Moviez and Qube, through imposition of restrictions on supply of content in lease agreements entered into with CTOs (cinema theatre owners), created barriers for players engaged in the provision of post-production processing services.”
They also “blocked a significant number of cinema theatre owners” equipped with Digital Cinema Initiatives-compliant digital cinema systems from being serviced by any other player, according to the statement.
The regulator has instructed UFO Moviez and Qube to refrain from entering into lease agreements with cinema theatre owners that impose restrictions on the supply of content from other parties.
The CCI has stated that the existing lease agreements with cinema theatre owners stand modified “such that they don’t impose restrictions on supply of content from parties other than UFO Moviez (and its affiliates) and Qube.”
