CCI seeks public comments on Rs. 500 cr PVR-DT Cinemas deal

The Rs.500 crore-transaction was billed as one of the major consolidation exercises in the country’s film exhibition business.

December 13, 2015 12:07 am | Updated 12:09 am IST - NEW DELHI:

The Rs.500 crore-transaction was billed as one of the major consolidation exercises in the country’s film exhibition business.

The Rs.500 crore-transaction was billed as one of the major consolidation exercises in the country’s film exhibition business.

After seeking public comments in mega merger transactions including the around $40 billion Holcim-Lafarge deal and the $4 billion Sun Pharma-Ranbaxy deal, fair trade regulator Competition Commission of India (CCI) has now decided to carry out a similar public scrutiny exercise on the movie theatre chain PVR’s Rs.500-crore acquisition of the cinema exhibition business of DLF Utilities Ltd., DT Cinemas.

According to an official statement, CCI was of the prima facie opinion that the proposed combination (the acquisition of DT Cinemas by PVR Ltd.) is likely to have an appreciable adverse effect on competition.

The Rs.500 crore-transaction was billed as one of the major consolidation exercises in the country’s film exhibition business.

The CCI has directed PVR to publish details of the combination (in newspapers and its website) for bringing the combination to the knowledge or information of the public and persons affected or likely to be affected by such combination.

Public comments have to be addressed to the Secretary, CCI within fifteen working days from the date of publication of details of the combination, the statement said.

Significantly, in the Holcim-Lafarge deal and the Sun Pharma-Ranbaxy deal, the CCI had ordered divestment of some assets by the entities concerned to effectively address anti-competition concerns.

In July, PVR had sought the CCI’s nod for the deal with DT Cinemas — DLF’s cinema exhibition business comprising 39 screens (29 existing and 10 upcoming) in Delhi, Gurgaon, Noida and Chandigarh with a total capacity of around 9,000 seats.

115 multiplexes

PVR had announced the deal in June. Following the deal, PVR said it will have a presence in 44 cities with 115 multiplexes and 506 screens.

According to PVR, the proposed combination will not impact competition in the market due to the lack of high entry barriers and the consequent fluctuations in the operators’ future market share, as there are many operators who are in the process of entering the relevant market.

Also, owing to the presence of many theatres in the market, the proposed combination would not impact or limit consumer choices in the relevant market — Delhi-NCR and Chandigarh, the statement said.

PVR had said, “at the upstream level, the proposed combination will not provide PVR with any additional market power in terms of the relationship with film distributors since the latter work on a non-exclusive basis and the revenue sharing is also same across all distributors.”

If as a result of the proposed combination, any attempt is made to increase price or reduce quality of service offered, consumers are likely to shift to other theatres or other modes of watching films and even other leisure activities/entertainment services, which would lead to a reduction in footfalls and will adversely affect the company’s non-ticket revenue streams (food and beverages and advertising) since these streams of revenue depend on the footfall, PVR had told the regulator.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.