The Competition Commission of India has taken the side of multiplexes — PVR Ltd., Inox Leisure Ltd., Cinepolis India Pvt. Ltd., Carnival Motion Pictures Pvt. Ltd. and FICCI Multiplex Association of India — and observed that there is no prima facie case warranting an investigation into four main allegations: undue imposition of Virtual Print Fee (VPF), non-negotiable revenue-sharing agreements, delay in payments and lack of transparency in exhibition of trailers and promotions during intervals.
The case was filed by Bollywood producer Ronnie Screwvala. This verdict is a setback for Tamil film producers, who in the first half of 2018, shut down the film industry for weeks seeking, among other things, an end to VPF and that DSPs and theatre owners share the advertisement revenue.
The Commission has noted that since the process of imposition of VPF originated from Hollywood and was adopted in India without any formal/written agreement, “the question of formal arrangement of ‘sunset clause’ does not exist”. Further, noting that fixing an “appropriate fee and the time period” falls outside the domain of the Commission, CCI underlined that it could not find collective action by the multiplexes since they had made efforts to negotiate “rates and time period” with the producers.
With regard to the allegation that they had imposed “non-negotiable revenue-sharing” agreements, CCI said the current agreement is the result of negotiations between United Producers Distribution Forum and multiplexes in 2009 after the boycott by the former.
Asked about the CCI verdict, Senthil Kumar, co-founder, Qube Cinema Technologies, said, “We don't mind having a sunset clause but it's theatres that have to agree to pay for their equipment fully once our agreements end. We don't want to be forced to become unprofitable by producers who think we're making too much money. This judgment makes it clear they can't demand such things. What we make is a very low return on investment and no producer would make a movie that only promised such low returns.”
However, the members of the Tamil Film Producers Council continued to remain hopeful. Producer J. Sathish Kumar, a member of the committee advising the Special Officer, said, “The individual producers can certainly enter into any new deal with digital service providers and producers. We will find a way to put an end to VPF. When the six Hollywood studios need not pay VPF, why should we?”
Distributor and exhibitor Tiruppur Subramaniam said, “We will decide what we (theatre owners) want to do with our properties,” he said.
