2024 TaxPub(CL) 170 (CCI)
COMPETITION ACT, 2002
Section
4
Complainant filed complaint against agent of several broadcasters that it
had charged higher carriage fee as compared to other media companies, which
was in violation of section 4, but there were several players in the same
market and no evidence was placed regarding dominance, thus, no case of
contravention of section 4 was made out.
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Abuse of dominant position - Complaint
against charging of higher carriage fee as compared to other media companies - Availability
of several players in same market - No evidence place regarding any dominance
-- Whether case of contravention of section 4 is made out against agent of
several broadcasters
Complainant, who was engaged in business of
television broadcasting of news with brand name APN, filed complaint against
agent of several broadcasters (DEN) that the agent had charged higher carriage
fee from it as compared to other media companies. Therefore, such act of
charging excessive carriage fee was in violation of section 4. Held:
The complainant had not placed on record any material to suggest dominance of
the agent in the market for cable TV service. Further, there were several
players in the same market, which indicated minimal entry barriers in cable
television sector. The complainant had not placed on record any evidence to
substantiate its allegations in respect of charging excessive carriage fee. In
the absence of any material to indicate the contrary, the agent did not appear
to be dominant in the said relevant market. Therefore, no case of contravention
of the provisions of section 4 was made out against the agent. Thus, the
complaint was closed.
REFERRED :
FAVOUR : Against the complainant
A.Y. :
IN THE COMPETITION COMMISSION OF
INDIA
RAVNEET KAUR, CHAIRPERSON &
SANGEETA VERMA, MEMBER
Sobhagaya Media (P.)
Ltd. v. DEN Networks Ltd.
Case No. 11 of 2023
14 September, 2023
Under section 26(2) of the
Competition Act, 2002
1. The present Information has been filed by Sobhagaya Media Pvt. Ltd.
(Informant) under section 19(1)(a) of the Competition Act, 2002 (the Act)
against Den Networks Ltd. (DEN/OP) alleging contravention of the provisions of
section 3 and 4 of the Act.
2. The Informant is stated to be a company registered under the
Companies Act, 1956 and is engaged in the business of television broadcasting
of news, transmissions, systemization of written communications relating to
news etc. The Informant declares itself to be a cable television service
provider duly registered under section 3 of the Cable Television Networks
(Regulation) Act, 1995. The Informant runs its news channel with the brand name
'APN'.
3. The OP has been described as the agent or intermediary of several
broadcasters including ETV-UP and is stated to be distributing around 100
channels of different broadcasters. It has been further submitted that it acts
as a content aggregator and offers bouquets for distribution by bundling
together channels of different broadcasters.
4. It has been alleged that the Informant entered into an agreement
dated 15-12-2015 with DEN for a period from 1-8-2015 to 31-7-2016 (MOU) with
the state of Uttar Pradesh as the defined territory. It has been further
submitted that the term of this agreement was extended for another year based
on oral understanding. DEN was stated to be carrying the Informant's channel on
DEN's Digital Addressable Networks under the agreement.
5. As per the Informant, it made multiple payments to DEN under the
belief that the carriage fee charged by DEN is not more than the fee applicable
to other Hindi TV channels. However, the Informant gathered information from
reliable sources that the amount charged by DEN from other media companies
running numerous channels like News Nation Network Private Limited, Information
TV Private Limited, Zee Media Corporation Limited, ABP News etc. was much lower
compared to what was being charged from the Informant.
6. As per the Informant, the Telecom Regulatory Authority of India
(TRAI) issued a consultation paper on Draft Telecommunication (Broadcasting and
Cable Services) Interconnection (Addressable Systems) Regulations, 2016 on
14-10-2016. Post-issuance of the said consultation paper, the Informant is
stated to have requested DEN to charge carriage fee in accordance with the
consultation paper which was allegedly refused by DEN on the ground that the
consultation paper is merely a draft and therefore not binding. Thereafter,
TRAI issued a Notification, dated 3-3-2017 upon which the Informant
again raised the issue of exorbitant carriage fee and DEN allegedly conveyed to
the Informant that the notification is under challenge before the Hon'ble High
Court of Madras. On 23-5-2018, the Hon'ble High Court of Madras upheld the Notification,
dated 3-3-2017 issued by TRAI pursuant to which the Informant demanded
refund of the excess amount and advance paid to DEN. DEN, however, allegedly
conveyed to the Informant that the Judgment, dated 23-5-2018 of the
Hon'ble High Court of Madras is in appeal before the Hon'ble Supreme Court and
assured to carry the Informant's channel free of cost as it is a free to air
channel in case the Hon'ble Supreme Court upholds the judgment of the Madras
High Court.
7. The Informant further averred that as per the above mentioned Notification,
dated 3-3-2017, DEN could not have charged the amount from the Informant as
it had more than 20% subscribers in the State of Uttar Pradesh. DEN could have
charged a maximum of 20 paise per subscriber, however, it has charged much more
than that.
8. It has been further averred that DEN had orally assured the
Informant that the excess amount will be adjusted in the third year by giving
free signal for one year to the Informant. On the basis of this oral assurance,
the Informant made payments in accordance with the agreement dated 15-12-2015
for the period from 1-8-2016 to 31-7-2017 under the hope that DEN will adjust
the excess paid amount by giving free signal in the third year. As per the
Informant, the parties had mutually agreed to extend the agreement on oral
terms without executing a further written agreement.
9. The Informant stated that it made various representations to DEN
regarding refund of excess money, non-execution of agreement, poor signals to
APN (a free to air channel), and also sent reminders related to revision of
carriage fees on the basis of the TRAI notification etc. However, DEN did not
pay any heed to any of the reminders.
10. The informant has alleged that, in light of the above-mentioned
facts and circumstances, DEN has violated various provisions of section 4 of
the Act.
11. Further, as per the Informant, the conduct of DEN also results in
constructive refusal to deal as discounts are offered to other channels on
certain parameters and APN News is treated differently and excluded, thereby
resulting in violation of section 3(4)(d) of the Act. The Informant has also
sought interim relief under section 33 of the Act by way of directing DEN to
carry and air the channel of the Informant pending investigation free of cost.
12. The Commission considered the Information in its ordinary meeting on
16-5-2023 and vide order of even date directed to forward a copy of Information
to the OP with a direction to file its reply thereon. The reply from the OP was
received on 19-6-2023. The Informant was also directed to submit copy of the
agreement dated 15-12-2015 executed with the OP as mentioned in the
Information. The Informant submitted the said copy of agreement on 5-6-2023.
The Informant was also allowed to file its rejoinder to the reply filed by the
OP within 2 weeks of its receipt, with an advance copy to OP. The Informant,
however, has chosen not to file any rejoinder to the OP's reply.
13. In its reply, DEN has submitted that the Informant is indulging in
forum shopping as Broadcasting Petition No. 79 of 2019 filed by OP
against the Informant is pending before the Telecom Disputes Settlement
Appellate Tribunal (TDSAT) in respect of default in payment of outstanding
amounts towards channel placement fees arising out of the same agreement. It
has been submitted that the Informant has put up a similar case, as in the
Information, in its counter affidavit to the Petition. DEN has submitted that
it raised invoices according to the four channel placement agreements executed
with the Informant, however, the Informant consistently made short payments
which have led to an outstanding amount towards DEN. Thereafter, DEN served a Demand
Notice, dated 13-8-2018 on the Informant and subsequently was constrained
to file Broadcasting Petition No. 79 of 2019 before TDSAT.
14. OP has further averred that the channel placement fee depends on
various factors such as popularity of the channel, position of the channel,
position of neighbouring channels, reach of channel, obligations under
broadcaster's (Reference Interconnect Offer) RIO for pay channels etc. DEN has
submitted that the Informant had never raised any complaint against DEN as
regards the quality of service or placement fee during the term of the
agreement and it is only after the filing of the Broadcasting Petition that the
Informant has raised such issues.
15. DEN has further submitted that the Informant is seeking to draw a
comparison with the fee charged for Pay Channels whereas the Informant's
channel is a free to air channel. Further, it has been submitted that the TRAI
Notification, dated 3-3-2017, relied upon by the Informant to claim
exemption from carriage fee, is not applicable to the present case as firstly,
the nature of the agreement executed between the parties (Placement Agreement)
is different from the one regulated by the notification (Carriage RIO) and
secondly, the carriage fee regulation of 2017 was implemented with effect from
February 2019. It has also been submitted that DEN is not dominant in the
market due to the existence of other competing MSOs in the Broadcasting and
Cable industry.
16. The Commission has perused the Information and the reply filed by
DEN.
17. The Informant appears to be aggrieved by the alleged excessive
carriage fee charged by DEN for carrying the Informant's channel on its
network. The Informant has alleged that the conduct of DEN falls foul of
section 3(4) and section 4 of the Act.
18. Before delving into the merits of the case, it is observed that
television is one of the most prominent mediums in India for transmission of
information, news, entertainment, etc. The television broadcasting and
distribution services in India mainly comprise Cable Television Services (Cable
TV), Direct-to-Home (DTH) services, Internet Protocol Television (IPTV)
services, Headend-in-the-Sky (HITS) services, terrestrial TV services provided
by Doordarshan - the public broadcaster.
19. For examining allegations pertaining to section 4 of the Act, the
delineation of the relevant market is essential to first ascertain dominance
and thereafter, the alleged conduct of DEN in the said relevant market can be
examined.
20. In this regard, it would be instructive to note the order of the
Commission in the case of Kansan News (P.) Ltd. v. Fast Way Transmission
(P.) Ltd. [Case No. 36 of 2011, dated 3-7-2012] which was instituted
against Multi System Operators (MSOs), wherein it was observed that cable TV
service is a distinct product and is not a substitute for other platforms of TV
channel transmission such as DTH, IPTV etc. The relevant extracts of the observations
of the Commission are reproduced hereunder :--
'....The
characteristics/features of cable TV are different from the other platforms of
transmission
6.2.4 On the
basis of difference in technology, scalability, viewing experience and the
reach, the DTH, IPTV and cable TV is services are not interchangeable or
substitutable with each other.
6.2.5 The
Commission observes that in terms of accessibility of service to the consumer,
the reach of the cable TV is different from other platforms of transmission.
Cable TV can reach any place only with the help of cables whereas DTH works
everywhere even the rural and remote areas. A cable operator provides services
such as exclusive local channels which are exclusive to the cable operators and
are not generally provided by DTH or other service providers.
..................................
6.2.8 The
Commission further observes that DTH viewers receive the transmission of
channels independently from the satellite whereas the cable TV operators
receive the signals from the broadcasters through satellite in their control
room and thereafter distribute these signals to customers through cables. There
is no choice for consumers in selection of the channels in case of cable
transmissions whereas the choices are given by the DTH service providers. The
installation of the DTH in homes requires set top box, dish antenna and remote
etc. whereas no such requirements are there for cable installation. The
spectrum used by these two transmissions is also different.'
21. Further, TRAI in its consultation paper dated 25-10-2021 on ''Market
Structure/Competition in cable TV services'' has also noted that DTH services
are not perfectly substitutable with cable TV services, as certain factors are
unique to cable industry. In this regard, it is noted that cable TV operators
can provide broadband and voice services in addition to the distribution of TV
channels, which DTH operators cannot. Furthermore, even for distribution of TV
channels, competition within the cable TV sector is essential as cable TV
networks operate on a State/regional basis and can choose specific channels to
be supplied according to the demand in a particular area whereas DTH services
operate on a national basis and transmit the same channels throughout the
country irrespective of variations in demand of channels in different market.
22. With regard to the determination of relevant geographic market, the
Commission is of the view that due to the factors such as local specification
requirements, consumer preferences, communication language, distribution
network etc. the territory of the State is the relevant geographic market in
the present matter.
23. Accordingly, the relevant market in the present case may be taken as
the market for cable TV service in the State of Uttar Pradesh.
24. In relation to assessment of dominance, the Informant has not placed
on record any material to suggest dominance of DEN in the market for cable TV
service in the State of Uttar Pradesh. However, based on the information
available in TRAI's Paper on 'Recommendations on Entry Level Net worth
requirement of Multi-system Operators in Cable TV service',
it appears that four MSOs i.e., SITI, IMCL, DEN and Fastway have their presence
in the State of Uttar Pradesh. Further, as per the Ministry of Information and
Broadcasting, in addition to these four MSOs, there are several other MSOs
registered in the State of Uttar Pradesh indicating minimal entry barriers in
the cable television sector.
25. In the above market construct including presence of multiple players
and in the absence of any material to indicate the contrary, the OP does not
appear to be dominant in the said relevant market.
26. The Commission notes that arguendo cable TV and DTH services may be
considered as substitutes with each other and thus, falling in the same
relevant market. However, in such broader relevant market, the market power of
the OP, if any, would further weaken. Thus, in the absence of dominance of DEN
in the relevant market, no case of contravention of the provisions of section 4
of the Act can be made out.
27. Coming to the alleged conduct on the part of the OP, i.e., charging
excessive carriage fee, the Commission notes that the Informant has not placed
on record any evidence to substantiate its allegations. Further, the Informant
chose to not file any rejoinder to the reply filed by the OP negating the
contentions of the Informant in this regard.
28. In these circumstances, no case of contravention of provisions of
either section 3(4) or section 4 of the Act is made out against the OP and
thus, the matter is ordered to be closed forthwith under section 26(2) of the
Act. Consequently, no case for grant of relief(s) as sought under section 33 of
the Act arises and the prayer for the same also stands rejected.
29. The Secretary is directed to communicate to the parties,
accordingly.