CCI Order:
MULTIPLEXES CANNOT OVERCHARGE FOR COLD DRINKS, ETC.
COMPETITION COMMISSION OF INDIA
Case No. UTPE-99/2009 & RTPE-16/2009
ORDER UNDER SECTION 27 OF THE COMPETITION ACT
Date of Order: 23rd May, 2011
The purpose of going to a multiplex may be for watching movie but in the present case the purpose cannot be a factor for defining the relevant geographical market. Of course, the movie goers are going to watch the movie but the purpose is not only watching a movie but a wholesome entertainment.
M/s ILL further states that it is a natural choice and not a forced one to go for a product which is conveniently available at sales counters and as such the choice of the food and beverages available at the sales counters does not determine the decision of the customers to visit a multiplex. The logic given by M/s ILL is funny as a movie cannot be substituted by any kind of beverages or vice-versa.
The argument of M/s ILL that there is no compulsion on the consumers to buy any beverages, and it is their natural choice to go for it is correct but this argument would have been valid if the alternatives/ substitutes have been provided.
Secondly, ILL does not allow any other supplier of bottled water and soft drinks inside its premises. It leaves cine goers without any choice except to consume the products offered by it. The ILL, therefore, enjoys the position of strength in the relevant market whereby it is in a position to affect its consumers in its favour.
The DG has finally concluded that based on the market share, size and resources, commercial advantages, dependence of consumers, countervailing buying power of consumers and the marketing entry barriers, it is conclusively established that ILL is completely dominant in the relevant market of sale of bottled water and other cold drinks products inside the geographical limits of its multiplexes.
Further, ILL enjoys complete economic power in the sense that its consumers are completely dependent on it for the relevant products offered by it within its multiplexes. These customers are practically locked-in customers as they cannot go outside the premises because of security reasons.
I have no doubt that ILL has indulged into following activities:- (a) It is charging excessive and exorbitant price for the sale of bottled water and soft drinks manufactured and supplied by HCCBPL (b) It has entered into exclusive supply agreement with HCCBPL for the supply of packaged bottled water and soft drinks which has created entry barriers for other supplier of the same product and by indulging in such practice market access was denied to all other competitors. (c) It has imposed unfair and discriminatory conditions in purchase and sale of bottled water and packaged soft drinks by charging two different prices for the same product having same quantity, quality and characteristics (d) By giving 'preferred beverage supplier' status to HCCBPL it has put discriminatory conditions for other suppliers
It is submitted that competition law protects competition and consumers, not a particular competitor.
I, therefore, am of the considered opinion that this is a fit case where following directions under Section 27 of the Act need to be issued:
1) M/s Inox Leisure Limited and M/s Hindustan Coca Cola Beverages Pvt. Ltd are directed to immediately stop from charging discriminatory prices from the customers.
2) The discriminatory conditions mentioned in the agreement dated 10.06.2008 and any other subsequent agreement to this effect be changed immediately to allow other competitors of the same product within the premises of multiplex owned by ILL.
3) A penalty of 5% of the average of the turnover for the last three preceding financial years is imposed upon M/s ILL and HCCBPL for deliberately entering into exclusive supply agreement to foreclose the competition and driving the competitors out of the market.
The CCI Order can be seen/download here:
CCI Order: Multiplexes cannot overcharge for cold drinks, etc.
GREETINGS AND WARM REGARDS
Surendera M. Bhanot
- Coordinator, RTIFED, Punjab Chandigarh
- Youth for Human Rights International - YHRI - South Asia
- Jt. Secretary, Amateur Judo Association of Chandigarh
- Member, SPACE - Society for Promotion and Conservation of Environment, Chandigarh
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