The Competition Act 2002

A GROUP 6 INITIATIVE.

Motion Picture Association, Delhi

The Pledge

The case study relates to information filed by UTV Software Communications Limited (the informant) alleging the Motion Pictures Association , Delhi (opposite party) has abused its dominant position in contravention of provisions of section 4 of the Act.

BACKGROUND CHECK

Motion Picture Association, Delhi• The Motion picture association of Delhi is registered under

section 25 of the Companies Ac, 1956. The MPA as a body

has been formed to promote and assist the business of

production, distribution , exhibition of films and also to

provide a common platform to its members to meet and

address their problems.

Allegations

• Abuse of Dominant Position.

• Forces to sign Producer distributor certificate.

• Acquiring Form.

• Restricts performance of business vide its MOA.

• Penalty.

• Anti – competitive with regards to registration of

film.

• Problems created for release of ‘Peepli Live’ and ‘No

one killed Jessica’, ‘7 khoon maaf’ and ‘Dhobi

Ghaat’.

• Rules of body Anti-Competitive.

• Restricts freedom to contract.

• Unreasonable terms and conditions.

• Unfair and discrimminatoory restrictions.

Investigatio

ns by D

G and

CCI

• Membership essential to carry out business

smoothly.

• Cessation of membership on dealing with non

members.

• Restrictive rules.

• Prescribes pro-forma , acquiring form.

• Restriction on other sources such as

satellite/cable/internet etc.

• Tie in agreements.

• Pressure through letters and circulars by MPA.

• Association imposes penalty for breaking of

agreement.

• Activities seem to be restrictive and violative of

the act.

The Turn

Reply on behalf of MPA , Delhi

• Denies all allegations.

• Argues that membership is voluntary no coercion.

• UTV wants to take benefits of membership as well

as complain against it.

• No commercial activity.

• Rules jointly framed by all members.

• DG never mentioned UTV as its member.

• No independent investigation.

Reply on behalf of Informant

• MPA formed as a body to promote the business of distribution

not to dominate it.

• Refusal to register voilates section 4 – abuse of dominant

position.

• MPA not a charitable organisation but a virtual cartel.

• Three other companies have already fled complaint regarding

similar malpractices.

The Prestige

Let’s Analyse

The ultimate authority must always rest with the individual's own reason and critical analysis.

~Dalai Lama

The Jury

• Issue 1 : Whether MPA is an ‘enterprise’ within the meaning of

section 2(h) of the act and if the answer to this is affirmative, can

its acts and conducts be said to be violative of section 4 of the

act?

• Issue 2: Whether the rules and regulations, acts and conducts of

MPA are subject matter of examination under section # of the act?

• Issue 3: Whether the rules , regulations and byelaws of MPA are

anti-competitive?

The Order

The MSMED Act 2006

MSME-India’s bloodline

• The Importance of Small and Medium

Enterprises (SMEs) in any economy cannot

be overlooked as they form a major chunk

in the economic activity of nations.

~They have unique advantages due to:-

• their size

• their comparatively high labor-capital ratio

• need a shorter gestation period

• focus on relatively smaller markets

• need lower investments

• ensure a more equitable distribution of national income

• facilitate an effective mobilization of resources of capital

and skills which might otherwise remain unutilized and

• Stimulate the growth of industrial entrepreneurship.

• According to a UNIDO report, 4 supports for SMEs are

generally based on three assumptions.

– it sustains a broad and diversified private sector and creates

employment and thus benefits the country as a whole

– second, a strong SME sector will not emerge without support from

the state, but they suffer disadvantages in the markets because

of their size

– the programs aimed at smallest enterprises, have been justified

more in terms of their welfare impact than their economic

efficiency.

Indian SME at a Glance

• In India, SME sector accounts for around 95% of the

industrial units, 40% of the value added in the

manufacturing sector output, 34% of exports and

provides direct employment to 20 million persons in

around 3.6 million registered SME units. The SME sector in

India contributes to about 7% of India’s GDP during 2002-

03. Now, the question is, Can it overtake the invasion of

foreign companies through their innovative, quality,

affordable/reasonable and readily available products?

SIDBI(small industries development bank of India)

We will be discussing specific measures taken by SIDBI in

relation to helping MSME sector:-

• promotion, financing and development of Industries in the

small scale sector and coordinating the functions of other

institutions engaged in similar activities.

• SIDBI retained its position in the top 30 Development Banks

of the World in the latest ranking of The Banker, London.

• It also provides funds to the professional and self-employed

persons setting up small-sized professional ventures.

• Focus Segments of SIDBI

•  Manufacturing

–  Micro: Investment in plant & machinery up to Rs.25 lacs.

–  Small: Gross Machinery Investment up to Rs 5 crore.

–  Medium: Gross Machinery Investment less than or equal to Rs 10

crore

•  Service Sector

Healthcare, Hospitality, leisure, entertainment, IT/IT enabled

businesses, etc. (Project Cost limit up to Rs 2500 Million)

•  Infrastructure Sector

Power, Roads, Ports, Telecom, MSME infrastructure, etc.

• SIDBI: Direct Loans for MSME Segment

• Term Loans for MSME Units and Service Sector Entities

Eligible Projects

–  New projects; expansion / modernization / diversification

projects, marketing requirements, working capital margin, etc.

of well run MSME units.

–  Land acquisition and construction of factory building with or

without additional plant and machinery, for units relocating to

industrial areas.

Assistance

• Need based

–  Interest: Competitive (PLR -1 to + 2.5) – depending on the rating of the

customer – Current PLR –

– 12.5%

–  Security: Flexible, including collateral free lending for loans up to Rs.5

Million under CGTMSE (limit

– has since been increased to Rs.10 Million).

–  Other Benefits: Dovetailing with GoI sponsored schemes such as CLCSS,

TUFS, IDLSS and Food

– Processing subsidy based on eligibility.

Main Benefits under Govt. sponsored Schemes :

• Credit Linked Capital Subsidy Scheme (CLCSS):

• Technology Up-gradation Fund Scheme (TUFS):

• Integrated Development of Leather Sector Scheme:

• Food Processing Industries:

• Scheme for Energy Saving in MSME Sector (JICA – Line of

Credit)

• Receivables Finance Scheme (RFS)

• Invoice Discounting Scheme

CREDITS

• Prateek Bhardwaj-31

• Esha Sharma-32

• Pratik Ladda-33

• Prerna Gupta-34

• Prithvi Ghag-35