Bombay Times spoke to the producer after the Competition Commission of India ruled in favour of the multiplexes on the Virtual Print Fee (VPF) issue
Rachana Dubey (BOMBAY TIMES; July 26, 2019)

Back in March, producer Ronnie Screwvala had filed case with the government body Competition Commission of India, against four multiplex chains — PVR, Inox, Cinepolis and Carnival Cinemas — and the FICCI Multiplex Association of India, alleging undue imposition of Virtual Print Fee (VPF). In his petition, the filmmaker complained that the multiplexes make Indian film producers/distributors cough up Rs 20,000 for every film screened, per screen as VPF.

On Wednesday evening, the CCI ruled the matter favouring the multiplex chains and their association, citing that there wasn’t enough reason or material for them to initiate a probe in the matter as Ronnie had demanded in his petition. The Commission observed that the general allegations made in the case, including lack of transparency in exhibition of trailers and promotions, do not fall within the ambit of the provisions of the Competition Act, 2002. The Commission was of the opinion that there exists no prima facie case warranting investigation into the matter.

Talking to BT about this, Ronnie said, “I have read the ruling from the CCI on the cartelization by the multiplexes and they have dismissed the petition on the grounds that it lacked documented proof of such misuse of collective power. My complaint was not an anonymous one which is normally how it starts. It was based on asking the CCI to launch a formal probe and investigation and they would have got all the documentation and proof they needed. But they have ruled on it and I respect and abide by their final view. I am disappointed, though not surprised, at the complete lack of support from all colleagues, producers, distributors and the creative community who in private commended the action. But not one individual, company or association supported my complaint as that would have gone a long way to endorse with the CCI the apparent practices that is common knowledge to all. I am a firm believer that there is a circle of life and in the end, truth always catches up with reality. So, I am sure that at an appropriate time there will be justice to this. Meanwhile, it’s business as usual for the multiplexes while fair play takes a back seat.”

Talking about the ruling, Kamal Gianchandani, the head honcho of PVR Cinemas, told BT, “I think the CCI’s decision validates what we have believed and said from the time this one particular matter came to the fore. I am thankful to them for viewing it objectively.”

To jog your memory, as a result of Ronnie’s petition, Inox Leisure had boycotted the film Mard Ko Dard Nahi Hota and refused to screen it (which was produced by Ronnie’s company). Reportedly, he was asked to withdraw his complaint, if he wanted the multiplex chain to screen his film. The producer, it’s learnt, had paid VPF to other multiplexes, albeit under protest, for his film to be screened. His petition described VPF as a draconian, discriminatory charge that the multiplex chains are forcibly imposing.

In 2010, following a discussion among producers, distributors and exhibitors, the process of transformation from physical prints to digital had started. Back then, it was agreed upon that VPF will be levied to support the transition for five years, which ended in December 2015. According to Ronnie’s complaint, the period was extended twice, following a verbal agreement between producers and distributors with the sunset clause till December 2017.

What is Virtual Print Fee?
Earlier, when films were developed from negatives, the distributors and producers had to pay a Print Fee to develop the print of their films. And the exhibitors used to bear the projector costs. VPF was first introduced to help make multiplexes compliant with Digital Cinema Initiaties (DCI), a technology that helps reduce cost, curbs piracy and enhances the movie-viewing experience. Since the technology was costly, it was agreed that the multiplex chains will charge Rs 20,000 per screen for each movie for five years to recover that cost, beginning 2010.
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Ronnie Screwvala reacts to the CCI’s order against his allegation of undue imposition of Virtual Print Fee by national multiplex chains; Kamal Gianchandani of PVR says it was not an industry issue
Himesh Mankad (MUMBAI MIRROR; July 26, 2019)

On March 19, Mirror had reported that Ronnie Screwvala had filed a case with the Competition Commission of India (CCI) against four multiplex chains—PVR, Inox, Cinepolis and Carnival Cinemas—and the FCCI Multiplex Association of India after the release of Sushant Singh Rajput’s dacoit-drama, Sonchiriya, for “anti-competitive collusion with respect to undue imposition of Virtual Print Fee (VPF)”. In his petition, the filmmaker had alleged that the multiplexes make Indian film producers/distributors pay Rs 20,000 for every film screened in their theatres as VPF. He described it as a “draconian discriminatory charge that the multiplex chains are forcibly imposing”.

We have now learnt that in its judgment passed on Wednesday, the CCI has given a clean chit to the multiplexes. “The informant (Ronnie) did not allege that VPF is anti-competitive per-se, rather, the allegation of informant pertains to its undue imposition after a certain period,” read the judgment. It observed that there is no formal/written agreement pertaining to imposition of VPF between producers and national multiplex chains, hence a ‘Sun-set clause’ doesn’t exist. The case was filed under section 3 of the Competition Act, 2002, which prohibits an association or enterprise from entering into anti-competitive agreement.

Ronnie, in his petition, had stated that following a discussion between producers, distributors and exhibitors in 2010, the transition from physical prints to digital started and a fee was agreed upon to support the evolution for five years till December 2015. It was extended twice, following a verbal agreement with producers/ distributors till December 2017. “But they have continued collecting VPF directly from distributors of Hindi and regional films,” he groused. Apart from VPF, Ronnie also raised concern over delay in release of payment by the multiplexes, lack of transparency over screening advertisements and inserting interval in films which don’t call for a break. These grouses didn’t fall within ambit of the Competition Act, 2002. The concluding lines of the CCI’s order read, “The commission does not find alleged contravention of the provision of Section 3 of the Act against opposite parties being made out.”

Kamal Gianchandani, CEO, PVR, reacted to the CCI’s order, saying, “It is a validation of the position we had taken all along.” He added that partners often have disagreements and he’s looking forward to the future because content producers and suppliers are integral to the business. “We are committed to working in a constructive fashion. I’m glad that the debate at the CCI forum is out of the way, this wasn’t an industry issue, but rather a disagreement with one producer,” he insisted.

Ronnie is disappointed that colleagues from Bollywood didn’t come forward to support him. He believes that CCI’s verdict would have been different had the film industry shown some unity. “Have read the ruling from the CCI on the cartelization by the ’plexes and they have dismissed the petition on the grounds that it lacked documented proof of such misuse of collective power. My complaint was not an anonymous one which is normally how it starts and was based on asking the CCI to launch a formal probe and investigation to all the practices and they would have got all the documentation and proof they needed. But they have ruled on it and I respect and abide by their final view. Am disappointed though not surprised at the lack of support from colleagues, producers, distributors and creative community who, in private, commended the action but not one individual, company or association supported my complaint as that would have gone a long way to endorse with the CCI the apparent practices that is common knowledge to all.”

He ended saying, “But I am a firm believer that there is a Circle of Life and in the end truth always catches up with reality so am sure at an appropriate time there will be justice. In the meantime, it’s business as usual for the ’plexes while fair play takes a back seat.”