The Competition Commission tightens the 'noose' around T-Series

In late 2011, we had blogged about a complaint filed by HT Media before the Competition Commission of India (CCI), alleging that Super Cassettes (T-Series) was abusing its dominant position while licensing its content to radio stations. 

Image from here

This complaint is one of the many cases in the massive litigation between the radio industry and the music labels over licensing rates. Most of this litigation was taking place before the Copyright Board, a statutory body setup under the Copyright Act, 1957. All the proceedings before the Copyright Board involved applications for compulsory licensing, filed by radio stations, on the grounds that the rates being fixed by the music labels were unreasonable. In the second round of litigation, which concluded in 2010, the Copyright Board had fixed the licensing rate at 2% pro-rata as against the 20% being demanded by the music labels and although those proceedings were only against PPL, the Board delivered the ruling against all music labels, even if they were not part of PPL. In the immediate aftermath, while PPL and SIMCA had petitioned the Madras High Court for a stay on the Copyright Board’s judgment, T-Series had moved the Delhi High Court and was successful in getting a stay order on the judgment of the Copyright Board. This would mean that all radio stations would have to continue paying T-Series the previous higher royalty rate. 

All the above events were taking place in 2010 and early 2011. Probably frustrated with the slow progress before the Copyright Board, HT Media then filed a complaint with the Competition Commission in July, 2011. By November, 2011 the CCI had found prima facie merit in the complaint and had ordered its Director General to investigate T-Series. On receiving notice from the D-G in November, 2011 T-Series filed an application before the CCI challenging its jurisdiction to hear the matter on the grounds that the Copyright Board was hearing a compulsory licensing application filed by HT Media, which was going to decide the very same issues i.e. were the rates set by T-Series unreasonable? The CCI had dismissed that application without a hearing after which T-Series moved the Delhi High Court via a writ petition (W.P. 1119 of 2012) in February, 2012. 

The Delhi High Court disposed the writ petition, in October, 2012 after ordering the Competition Commission to hear the jurisdiction issue raised by T-Series as a preliminary objection before hearing the dispute on merits. That order can be accessed over here. The Competition Commission after hearing the preliminary objections regarding its jurisdiction ruled against T-Series and held that it was competent to hear HT Media’s complaint against T-Series despite the proceeding before the Copyright Board. 

In its order, the CCI reasoned that the nature of the proceedings for an abuse of dominant position under competition law were different from the compulsory licensing challenges being heard by the copyright board. The CCI explained that HT Media’s complaint was much more than just unreasonable licence fees being demanded by T-Series and that only the Competition Commission would have the jurisdiction to investigate these claims. As a result the CCI ruled that it had the jurisdiction to hear the complaint filed by HT Media. 

T-Series immediately appealed this order to the Delhi High Court earlier this month via W.P. No. 2037 of 2013. The Delhi High Court has refused to stay the order of the CCI for now and has posted the matter for final arguments on August 23rd, 2013. The order can be accessed over here. 

In the meanwhile, the Business-Standard has reported that the Director General has found T-Series to be in breach of Section 4 of the Competition Act i.e. that T-Series has abused its dominant position in the market. In pertinent part the Business-Standard report states “The DG’s report says the conditions imposed on radio operators, such as minimum commitment changes and mandatory payment of performance licence fee by T-Series bore no relation to the actual quantity of T-Series music broadcast by the FM channels and, thus, amounts to imposition of an unfair and discriminatory condition, in violation of Section 4(2)(a)(i) and 4(2)(a)(ii) of the Competition Act.” 

Thus as things stand today, the odd are against T-Series. It should be remembered that the CCI has been brutal in its decisions. It had fined DLF a sum of Rs. 600 crores, apart from fining 11 cement companies a sum of Rs. 6,304 crores. Thus if T-Series were to find itself at the wrong end of a CCI order, it could be facing a steep fine that is enough to put a huge hole in its balance-sheets. There is an obvious answer to T-Series present woes and that is to challenge the constitutionality of the Competition Commission. 

Like I had pointed out in an earlier post, the Competition Commission is nothing but a bunch of ex-bureaucrats save for some members like Justice Dingra. This entire setup is in gross violation of the Supreme Court’s judgement in the NCLT case. Most members of the CCI do not even have a law degree, which means that they are not even qualified to appear before the CCI as litigators but the law allows them to sit on the CCI as members and adjudicate cases. 

It is a pity that this farce has been allowed to continue till date. Given that T-Series is challenging the constitutionality of the Copyright Board, it might itself challenge the constitutionality of the CCI and save itself the trouble of being fined by the CCI.