Competition Commission of India

PVR’s proposed acquisition of DT cinemas

04.05.2016

MRTP/ Competition Laws

Is DT’s acquisition more curse than boon for PVR

PVR group assuaged the Competition Commission’s fears that its proposed takeover of DT cinemas would have an appreciable adverse effect on competition in film screenings in theatres in Delhi and surrounding National Capital Region.

PVR offered several concessions to prevent its already dominant position in the region from raising yet more red flags. Some of the concessions it has to tender to get the acquisition approved include terminating an agreement that would have seen seven new PVR screens in upcoming ‘Airia Mall’ in Gurgaon. It also ceded to the Commission’s demands of divesting 11 screens in South Delhi to alleviate competition concerns. Commitments also included a cap on ticket prices, food and beverage prices, quality commitments and further freezes on expansion.

PVR is also not allowed to agree with DLF a ‘right of first offer’ to develop and operate theatres in its malls. A non-compete clause between PVR and DLF, holding company of DT Cinemas, has also been watered down in its geographic extent and duration.

On broader scale, PVR agreed to not expand its multiplex theatres or taking over other theatres in the region for three years from the date of completion of acquisition. And it would not seek exclusivity of content from distributors for five years from the final order of the Commission.

Multiplex and high-end theatres in South Delhi posed a particular dilemma for the Commission. PVR and DT are direct competitors in South Delhi, operating nearly 80 per cent of all screens. Stakeholder comments raised concerns about a steady increase in prices after takeover, and the possibility of reduced quality for film-goers.

Tags : Takeover competition film theatre pvr

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