CCI orders probe into abuse of dominant position claim by Asianet against Star India, subsidiaries

The Competition Commission of India (CCI) last week ordered the Director-General (DG) to carry out an investigation into Star India Private Limited and its subsidiaries (opposite parties), in relation to allegations by Asianet Digital Network of abuse of dominant market position [Asianet Digital Network (P) Ltd. v Star India Private Limited]..Members Ashok Kumar Gupta, Sangeeta Verma and Bhagwant Singh Bishnoi found prima facie violations of the provisions of the Competition Act and asked the DG to submit an investigation report within 60 days;“The Commission directs the Director General (DG) to cause an investigation to be made into the matter and submit an investigation report within a period of 60 days from the date of receipt of this order,” the order read..Asianet (informant), is a Multi-System Operator (MSO) which runs television channels, predominantly in Kerala and also in Karnataka, Andhra Pradesh, Telangana and Odisha.It provides digital TV services to its customers directly as well as through local cable operators and currently provides services to about 10.02 lakh customers in Kerala and about 1.19 lakh customers in all other States combined (as of December 2021).The informant receives broadcasting signals from the Star India for monetary consideration..The informant alleged abuse of dominant position by the opposite parties stating that the informant was discriminated against and not extended discounts that were offered to their competitors.The informant claimed that discriminatory discounts were in contravention of the Act’s provisions as they denied market access to the informant.It was their submission that the new regulatory framework introduced the concept of the maximum retail price for each pay channel, and capped the total discount payable to distributors.After the introduction of the new framework, the informant started losing subscribers to the Kerala Communicators Cable Limited (KLCC) since they offered lower prices to local cable operators, who then offered lower prices to subscribers..On investigation, the informant found out that the lower prices were being offered since they were given special discounts up to 50 per cent by Star India. It was stated that in order to circumvent the new regulations, Star India had entered into marketing agreements with KCCL..Thus, the informant prayed for an investigation to be carried out into the discriminatory conduct, a declaration that Star had abused its dominant position and imposition of a penalty.The informant also sought a refund of excess amount in parity with KCCL and other MSOs, and ₹200 crores in compensation..While examining the issue, the Commission prima facie found that Star India enjoyed a dominant position in the relevant market.“Therefore, on the basis of market share, dependence of consumers, Size and resources of the enterprise (being part of global media conglomerate), vertical integration of the enterprise and countervailing power, the Commission is of prima facie view that OP-1 enjoy a position of dominance in the relevant market delineated supra,” the CCI recorded..Further, it observed that the alleged discriminatory conduct resulted in a significant loss to the informant and thus, there was a prima facie contravention of the Act’s provisions..In view of these, an investigation was ordered by CCI. The DG was directed to conduct the investigation without being swayed by the observations in the order..Chandhiok & Mahajan represented Asianet..[Read Order]