Tamil Nadu Film Exhibitors Association v. CCI (2015) 2 Comp LR 420 (Mad)
The appellants in this case are- The Tamil Nadu Film Exhibitors Association
The defendants in this case are-
a) Competition Commission of India
b) Raaj Kamal Film International
c) The State of Tamil Nadu
d) S. Sridhar and R. Ramanujam
1. This appeal has been combined from two different cases by the High Court of
Madras. The appellants through two different writ appeals had approached the
High Court, but the court combined both these cases as they arose from the same
cause of action.
2. The appellants are a registered society and the second appellants are film
producers. The producers alleged that the Film exhibitors had joined their hands
in placing a ban on the film ‘Viswaroopam’. The Appellants were against the fact
that the film was to be released through DTH service a day before the theatre
3. Due to this ban, the producers filed a complaint in CCI saying that it was
anti-competitive and in violation of section 3(3) (b) of the Competition Act.
4. Thus, the Competition Commission, under section 26 of the act, ordered the
Director General (DG) to start the investigation.
5. During that time, a small group of people, filed a complaint with the Police
Commissioner and thus the film was banned from theatres. But later the
commissioner himself lifted the ban and thus the movie got released.
6. The DG while investigating the complaint, asked the appellants to submit some
7. Immediately, the appellants, filed a writ petition in the court challenging
the order of the Competition Commission. They also filed a Police complaint
saying that the Producers had filed a complaint based on a forged document.
Thus, these appellants filed another writ petition seeking a mandamus to direct
the Commissioner of Police to take their complaint on record and initiate action
against the Producers.
8. But, the court dismissed for both the writs petition immediately. Hence, the
appellants appealed before the High Court of Madras.
9. While this happened, the Producers and the appellants reached at a
settlement. They decided that the producers will withdraw the complaint and that
the appellant will the Police compliant. Hence, they prayed before this court
that their compromise be recorded ad that they wished to withdraw the case.
10. But, the counsel appearing for the Competition Commission, said that as per
the investigation of the DG, all the reports said that the Film Exhibitors had
acted in an anti- competitive manner and that they had violated section 3(3)(b)
of the Competition Act.
11. Thus, the High Court had to frame a different set of issues on the fact
whether the settlement could be used by the appellants and the respondents to
withdraw the case.
There are 2 issues in this particular case which is being answered by the Madras
High Court. Both these issues instead of answering the question of whether there
have been anti-competitive agreements or not, they concentrate more on the
compromise between the appellants and the respondents. The issues in the case
are as follows (written as it is)-
A) whether it is possible, in the context of the scheme of the Competition
Act, 2002, for two adversaries to reach a settlement, thereby closing the doors
for an investigation or inquiry?
B) whether this court can record a memorandum of settlement like the one that
the parties have reached in this case?’
This court applies some sections of the Competition Act, 2002 to answer the
issues in the case.
To answer issue 1 the court explains the history and the scheme of competition
The sections used in this case are-
Section 3(3) (b)- Any agreement entered into between enterprises or associations
of enterprises or persons or associations of persons or between any person
and enterprise or
practice carried on, or decision taken by, any association of enterprises or
association of persons, including cartels, engaged in identical or similar
trade of goods or provision of services, which— limits or controls production,
supply, markets, technical development, investment or provision of services.
Section 18- Duties of Commission
Section 19- Inquiry into certain agreements and dominant position of
Section 26- Procedure for inquiry under section 19
Section 27- Orders by Commission after inquiry into agreements or abuse
of dominant position
Section 61- Exclusion of jurisdiction of civil courts
Section 62- Application of other laws not barred
In this case the focus has been shifted from other issues to the ones mentioned
above. There were several issues that were to be answered by the High Court, but
due to the fact that there was a settlement between respondent no.2 and the
appellant, the focus shifted on that. Instead of concentrating on the fact
whether the appellant had acted in an anti-competitive manner or not, the
attention shifted on the question whether in Competition Act the two parties who
are fighting against each other can settle the dispute between them by reaching
a compromise or not.
The contention of the counsel appearing for the CCI was, that as the DG had
already finished his investigation and come up with the conclusion that there
were anti-competitive agreements and acts committed by the appellants, they
could not settle the dispute through a compromise. The High court too agrees
with this contention and says that Competition act is not about two private
individuals rather, it is about the investigation, inquiry into the question
whether one of the parties is abusing its dominant position or not or whether
they have acted in an anti-competitive manner or not. Thus, the initial
complaint maybe made by a private individual but when the investigation and the
inquiry starts then it is for the general pubic that the CCI works for, as
anti-competitive arrangements and abuse of dominant position actually effects
the public at large rather than the private individual who complained. The court
says that had it been, that this case was about two private individuals and had
it been in a civil court then the High Court would have had no inhibitions in
recording the Memorandum of Compromise between the two parties but due to the
reason that this case is about anti-competitive arrangements the court cannot
dismiss the case as prayed for.
While trying to answer the first issue the court uses the mischief rule of
interpretation. It tells us the history of Competition Act and as to how it came
to be enacted. It discusses how before the Competition Act was enacted, we had
the MRTP Act in India. The MRTP Act was considered to be ineffective and it was
repealed as it had ‘no teeth’. After liberalisation in India in 1991 it became
even more clear that MRTP act could not effectively control all the Multi-
National Companies. Thus, finally in the year 2002 the Competition Act was
enacted to control the mischief which the MRTP act could not.
There have been amendments in the Competition act throughout the years. It was
mainly after the case of Brahm Dutt vs. Union of India [(2005) 2 SCC 431] that
there was an amendment in the act. Thus, the act not only regulates the market
but also acts as an adversary. Thus, today the act mainly covers Anti-trust
issues like -a) Anti-competitive arrangements b) Abuse of Dominant position c)
combination of the above two mentioned issues.
After discussing the history of the act, then the court discusses the Scheme of
the act to answer the first issue. The Competition Act under section 18 enlists
the duties of the CCI and under S.19 of the act, the Commission has got the
power to inquire into the complaints in order to check whether there is abuse of
dominant position, anti-competitive arrangements etc. Then the court discusses
section 26 which talks about the procedure to be followed during inquiry and
then section 27 which discusses the types of orders which the commission can
The main reason why the Court discusses the history and the scheme of the act is
that it wants to show that the act is not really concerned about the disputes
between 2 private individuals rather it is more concerned about anti-competitive
agreements and abuse of dominant position in the market which might effect the
freedom of trade.
Thus, after discussing these above mentioned sections, the court says that the
commission has the power to record the compromise between the parties but only
if the party guilty of acting in an anti-competitive manner has accepted its
fault and it promises not to continue its act anymore. If this happens then the
Commission only has to concentrate on the penalty provisions. But the most
important thing which is necessary while recording the compromise is that the
Commission look into the fact that the compromise between the parties is not a
way of avoiding the investigation into their anti-competitive agreements or
their acts of abusing the dominant position. Hence, as a precautionary step, the
commission should always look at the compromise and should understand its
purpose, if the intention is malafide, then it cannot be used by the parties to
withdraw the case. The court then discusses the situation of compromise or
settlement between the parties in a cartel system in both the USA and the
European Union. In both these places, the parties can reach a settlement but
only upto a certain extent. Thus, in India CCI has got the power under section
27 of the Competition Act to record such compromise but with the condition that
the settlement is not a way to hide all the anti-competitive activities and that
it is not against the interest of the consumers or the public.
For the second issue, the court says that it is section 62 of the Competition
act that talks about the exclusive jurisdiction of the CCI in competition
matters. It is due to this section that the jurisdiction of other civil courts
is ousted. But Article 226 of the Indian Constitution gives special power to the
High Court. Hence, High Court has the power to record the compromise, but it
chooses not to, due to the fact that as per the reports of the Director General
the appellants have engaged in anti-competitive activities and that too more
than once. This is the reason why the High Court has dismissed the appeal and
reverted the case back to CCI.
The High Court of Madras, says that the Competition Commission of India has the
power to record the compromise or the settlement arrived between the two
parties. But the only condition that has to be fulfilled by the CCI is that, it
needs to look carefully that the compromise between the 2 parties is not a way
of avoiding investigation into their anti-competitive agreements. If and only if
the compromise is a kind of a promise that they will discontinue their
anti-competitive agreements then the CCI can record such a settlement in order
to close the case.
But in this case what has been seen is that the appellants are guilty of
practicing anti-competitive agreements not just once but more than that. Hence,
their settlement with the respondent no.2 should not be a way of making the
respondents withdraw their police case. The settlement should not have been
backed by a malicious intention which might harm the freedom of trade and the
consumer’s interest in the future.
 The Competition Act, 2002