Kerala Film Exhibitors Federation indulging in Anti-Competitive Practices - Fine rightly imposed
Supreme Court Upholds Penalty on Kerala Film Exhibitors Federation for Anti-Competitive Practices. Office Bearers Basheer Ahamed and M.C. Bobby Penalized for Two-Year Disassociation and Monetary Fines
In a landmark decision dated September 26, 2025, the Supreme Court of India upheld the findings of the Competition Commission of India (CCI) against the Kerala Film Exhibitors Federation (KFEF) for engaging in anti-competitive practices. The judgment reinforces the CCI's authority to impose penalties on associations and their office bearers without the need for a second show cause notice.
The case stemmed from allegations by Crown Theatre, which accused KFEF and its office bearers—President P.V. Basheer Ahamed and General Secretary M.C. Bobby—of threatening film distributors to prevent the screening of movies at Crown Theatre. The Competition Commission, upon investigation by the Director General, found KFEF guilty of contravening Section 3(3)(b) of the Competition Act, 2002. The office bearers were deemed responsible for the anti-competitive actions under Section 48 of the Act.
The Supreme Court's decision overturns a prior order by the Competition Appellate Tribunal (COMPAT), which had set aside penalties on the individual office bearers citing a lack of a second show cause notice. The Supreme Court clarified that the statutory requirement was satisfied when the initial notice, including the Director General’s report, was issued. This notice sufficed for both responding to contraventions and considering penalties, aligning with principles of natural justice.
The Court emphasized that the Competition Commission's powers under Section 27 of the Act include the imposition of behavioural and structural remedies, integral for deterring future anti-competitive practices. The penalties imposed-amounting to 10% of the average income of the KFEF and its office bearers over the past three financial years-were upheld as proportional and necessary. Moreover, Basheer Ahamed and M.C. Bobby are barred from associating with KFEF for two years.
This ruling underscores the Supreme Court's commitment to maintaining fair competition and consumer interests, affirming the legislative intent of the Competition Act to prevent monopolistic practices. The decision serves as a stern warning to enterprises and their leaders against engaging in activities detrimental to market competition.
Bottom Line:
Notice issued under Section 26 of the Act is sufficient to impose penalties under Section 27 - No requirement for a second show cause notice specifying proposed penalties - Principles of natural justice satisfied when parties are provided the Director General’s report and are given an opportunity to respond.
Statutory provision(s): Competition Act, 2002 - Sections 3(1), 3(3)(b), 26, 27, 48; Article 19(1)(c) of the Constitution of India
