A bench of Competition Commission of Pakistan (CCP), comprising of Ms Rahat Kaunain Hassan, Chairperson of CCP and Dr Joseph Wilson, (Member), has passed an order in the matter of M/s. Cinepax Limited ('Cinepax'). CCP issued the decision, here on Friday.
Taking a compliance-oriented approach and finding a past violation, the CCP Bench agreed to accept Cinepax's offer to hold five showings for the underprivileged on their biggest screen, in lieu of their violation. The commission had received a complaint alleging a 'tie-in' of movie tickets with food coupons, ie sale of cinema tickets contingent on mandatory purchase of food coupons worth Rs 50 each, thus violating of Section 3(3)(c) of the Competition Act, 2010 ('the Act').
Following a preliminary investigation, CCP called a hearing on March 1, 2011 with Cinepax representatives that submitted that the tie-in had been done to benefit the public as well as make the price increase, from rupees 300 to 350, more acceptable. They contended that the practice had lasted for a period of six months after which it was just the movie ticket sold at Rs 350 and this practice stopped on April 7, 2010 before the CCP took cognisance of the matter.
Cinepax also argued that they were in fact not dominant in the relevant market as there were 11 other cinemas operating in the twin cities, ie, Rawalpindi and Islamabad, and therefore not subject to a Section 3 violation. Upon consideration of Cinepax's submissions, the CCP held that it was inclined to take a lenient approach given the tie-in had ended before the CCP initiated an inquiry.
The commission clarified that once an undertaking is dominant in the relevant market and is abusing its dominant position to force a customer to buy a distinct product, it is deemed anti-competitive under the Act. Secondly, the ambience, the quality of the theatre and screen, the service, and the prices of tickets at Cinepax put it in a distinct market, and because it was the only premium cinema in the twin city area, it held a dominant position in the premium cinema market, coming within the purview of Section 3 of the Act.
The CCP appreciated the amicable approach of Cinepax in the matter and its desire to maintain good corporate governance. Cinepax offered to hold five free movie showings during the year for the underprivileged in lieu of its violation. Therefore, pursuant to the commission's compliance-oriented approach where businesses are keen to rectify their behaviour and discipline themselves in accordance with law, it was deemed appropriate under the circumstances to take a lenient view and accept Cinepax's offer of holding a minimum of five free shows for the underprivileged during the year 2011.
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