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September 2018

CCI ORDERS PROBE OF STAR, SONY & IBF



The Competition Commission of India (CCI) has ordered an investigation into the conduct of Star TV, Sony Pictures Networks & the IBF.

CCI chairperson Sudhir Mittal instructed the antitrust watchdog's Director-General (DG) to probe what it stated appeared 'prima facie' anticompetitive behaviour.


NSTPL DISCRIMINATED AGAINST

In its several years long battle to seek justice, HITS platform Noida Software Technology Park Ltd (NSTPL) had approached the CCI with a complaint that 2 broadcasters - Star India & Sony Pictures Networks, facilitated by the Indian Broadcasting Foundation (IBF), had provided NSTPL impossibly high prices for their pay TV channels, effectively denying NSTPL access to these pay channels.



PUNITIVE RIO & CONCESSIONS TO FAVOURED

NSTPL accused Star, Sony & IBF of maintaining 2 parallel offers in the market:

1. The RIO offer at extremely high and onerous commercial terms which were unviable to operate under; and

2. A separate offer to preferred distributors on a fixed fee and/or Cost-Per-Subscriber (CPS) deal at highly attractive commercial terms.

Appearing for NSTPL, advocate Vivek Chib said Star & Sony priced their pay channels in their RIOs in such a manner so as to make it commercially unviable for any distributor operating on the RIO-based agreements to effectively compete in the market.

NSTPL alleged that Star & Sony had abused their dominant position to systematically deny it market access.


STAR'S REPLY

1. Star & Sony rejected the allegation that they held a dominant position.

2. On the allegation that it had offered differential pricing/ terms and conditions to NSTPL, vis-a-vis other larger distributors, Star submitted that it is a settled position in competition law that an enterprise, even if it is dominant, has the right to determine the terms and conditions of offering its product or services. Merely charging differential pricing to customers is not a violation of competition law and also argued that a broadcaster would not offer large discount to a small distributor.

3. Star & Sony even rejected the CCI's authority to hear the matter!

It is note worthy that earlier, TDSAT had already found such price discrimination to be violative of the TRAI's Interconnection Regulations (see below).


CCI VERDICT

The CCI pointed to the TDSAT judgment in NSTPL v/s Media Pro Enterprise India Pvt. Ltd. & Ors., wherein it was held:

"A-la-carte basis for the interconnect agreement is normally kept reserved by the broadcaster for the distributor with whom, for some reason it does not wish to enter into any commercial relationship but cannot outright deny the request for signals, due to regulations."

"In this country, unfortunately, RIOs are framed seemingly in negation of all the attributes of a true RIO. The RIO is used by the broadcaster as a coercive tool and a threat to the seeker of TV channels and it undermines the essence of the Regulations, which is to provide healthy competition by providing level playing field," the TDSAT had added.



"The RIO is used by the broadcaster as a coercive tool and a threat to the seeker of TV channels," TDSAT


Based on the above TDSAT observation, the CCI ruled:

"Prima facie insistence of the broadcasters to deal with the Informant only on RIO basis, which has been held to be discriminatory by Hon'ble TDSAT indicates a constructive refusal to deal with the Informant (NSTPL) by OP-1 (Star) and OP-2 (Sony) in contravention of the provisions of Section 3(4) of the Act."

On the broadcasters' challenge to CCI's jurisdiction to hear the complaint, the CCI said, "Under the Act, the powers of the Commission are in addition to and not in derogation of the TRAI's mandate to regulate the practices of the broadcasters in the sector."



The DG has also been instructed to probe other similar cases.

This is an excellent opportunity for MSOs to come forward and submit their complaints, it they have been subjected to similar oppressive practices by Star and Sony


INVESTIGATION ORDERED

In its 28-page order, the CCI has asked its Director General to conduct detailed investigation into the broadcasters. He has been directed to look into the role of persons or officers in charge of and responsible for the conduct of the businesses of Star India and Sony.

It has also instructed its DG that if during its investigations, the DG finds any other similar cases of denial of signal by Star & Sony insisting on its RIO (a-lacarte) rates, the DG should also investigate all such instances.

This is an excellent opportunity for MSOs to come forward and submit their complaints, it they have been subjected to similar oppressive practices by Star and Sony.

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