Prime Highlights

• India’s Competition Commission has imposed ₹2.69 crore fine on UFO Moviez and Qube Cinema for entering into anti-competitive deals with theatre owners.
• The deals were found to be impeding market entry and were in contravention of the Competition Act, 2002.

Key Facts

• UFO Moviez and its subsidiary Scrabble Digital Ltd have been directed to pay a fine of ₹1.04 crore, and Qube Cinema has been directed to pay a fine of ₹1.65 crore.
• The firms were penalized for imposing exclusive supply and tie-in terms in contracts.
• CCI has directed both the companies to refrain from such restrictive trade practices and alter their existing contracts.

Key Background

Competition Commission of India (CCI) has moved forcefully against anti-competitive behavior in the digital cinema distribution market by imposing a collective penalty of ₹2.69 crore on two leading players—UFO Moviez India Pvt. Ltd. and Qube Cinema Technologies Pvt. Ltd., and Scrabble Digital Ltd., which is a subsidiary of UFO Moviez. The probe was ordered on allegations of exclusivity and contract clauses that brought to an end healthy competition.

As per the CCI report, both the firms which led the market for digital cinema equipment and content processing had signed anti-competitive agreements with owners of cinemas’ theatres (CTOs). The agreements made CTOs compulsorily utilize their respective post-production processing (PPP) services—Scrabble and Qube—during the exhibition of films, and as a consequence, they were exposed to a de facto monopoly, which was harmful to the entry of competing service providers.

By imposing such tie-in and exclusivity arrangements, these companies stifled CTOs’ independence in choosing their own content processing providers. This not only stifled the freedom of the CTOs, but it also tilted competition within the market by creating artificial entry as well as expansion barriers to other operators. Conditions of such arrangements were found to be contrary to Section 3(4) of the Competition Act, 2002, under anti-competitive vertical agreements.

Instead, the CCI not just fined the companies monetarily—₹1.04 crore each for UFO Moviez and Scrabble, and ₹1.65 crore for Qube—but also directed them to stop and refrain from such behavior. The two firms have to modify their current contracts to remove any limiting provisions and are banned from entering into similar contracts in the future.

This decision reflects the CCI’s commitment to ensuring open market access and competitive practices, particularly in high-impact industries like digital cinema distribution, where access and choice are crucial to fair business operations.