On September 13, 2022, pursuant to a complaint filed by Consumer Unity & Trust Society (‘Informant'), the CCI dismissed the allegations against the proposed PVR-INOX merger.1
The Informant, stated to be a global, independent, non-profit, public policy research, advocacy and capacity building organization, had concerns regarding the proposed merger between PVR Limited (‘PVR') and INOX Leisure Limited (‘INOX'), resulting into the entity ‘PVR INOX Limited'. The Informant averred that the merger was exempt under the de minimis exemption due to the COVID-19 pandemic, which lowered the turnover of INOX. The Informant further alleged that the merger is likely to cause an AAEC in India as it will lead to: (i) reduction in consumer choice; (ii) adverse impact on consumers in terms of high prices and a deterioration in food and service quality; (iii) prevention of other cinema theatres from accessing movies from distributors and advertising content; (iv) high bargaining power of the PVR INOX Limited that will likely lead to onerous terms for distributors, especially for comparatively low budget films and vendors (including food and beverage suppliers) and (v) a situation that real estate owners/developers will have no option but to (possibly) accept one-sided terms of the Combined Entity because of their high bargaining power. In light of this, the Informant prayed to the CCI to initiate an investigation against PVR and INOX and accordingly impose a penalty.
The CCI dismissed the allegations and took the view that apprehension of likelihood of AAEC by an entity which is yet to take form cannot be a subject matter of inquiry/investigation under Section 3 or 4 of the Competition Act. However, it noted that post-facto, if any matter of abusive conduct under the provisions of the Competition Act is brought, or comes, to the notice of the CCI, that conduct may be examined at that stage in terms of the provisions of the Competition Act.
Footnote
1 Case No. 29 of 2022.
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