CCI Order: Multiplexes cannot overcharge for coldrinks, etc.
- Rajesh Modi @rajeshhmodi - @Devinder_Sharma very interesting judgement by
CCI on overcharging of cold drinks at multiplexes.
pdf, 66 pages
The purpose of going to a multiplex may be for watching movie but in
the present case the purpose cannot be a factor for defining the
relevant geographical market. Of course, the movie goers are going to
watch the movie but the purpose is not only watching a movie but a
M/s ILL further states that it is a natural choice and not a forced one to
go for a product which is conveniently available at sales counters and
as such the choice of the food and beverages available at the sales
counters does not determine the decision of the customers to visit a
multiplex. The logic given by M/s ILL is funny as a movie cannot be
substituted by any kind of beverages or vice-versa.
The argument of M/s ILL that there is no compulsion on the consumers to buy
and it is their natural choice to go for it is correct but this argument
would have been valid if the alternatives/substitutes have been
Secondly, ILL does not allow any other supplier of bottled water and
soft drinks inside its premises. It leaves cine goers without any choice
except to consume the products offered by it. The ILL, therefore, enjoys
the position of strength in the relevant market whereby it is in a position
to affect its consumers in its favour.
The DG has finally concluded that based on the market share, size and
resources, commercial advantages, dependence of consumers,
countervailing buying power of consumers and the marketing entry
barriers, it is conclusively established that ILL is completely dominant in
the relevant market of sale of bottled water and other cold drinks
products inside the geographical limits of its multiplexes.
Further, ILL enjoys complete economic power in the sense that its
consumers are completely dependent on it for the relevant products
offered by it within its multiplexes. These customers are practically
locked-in customers as they cannot go outside the premises because of
I have no doubt that ILL has indulged into following activities:-
(a) It is charging excessive and exorbitant price for the sale of bottled
water and soft drinks manufactured and supplied by HCCBPL
(b) It has entered into exclusive supply agreement with HCCBPL for
the supply of packaged bottled water and soft drinks which has
created entry barriers for other supplier of the same product and
by indulging in such practice market access was denied to all
(c) It has imposed unfair and discriminatory conditions in purchase
and sale of bottled water and packaged soft drinks by charging
two different prices for the same product having same quantity,
quality and characteristics
(d) By giving ‘preferred beverage supplier’ status to HCCBPL it has
put discriminatory conditions for other suppliers
It is submitted that competition law protects competition and
consumers, not a particular competitor.
I, therefore, am of the considered opinion that this is a fit case where
following directions under Section 27 of the Act need to be issued:
1) M/s Inox Leisure Limited and M/s Hindustan Coca Cola
Beverages Pvt. Ltd are directed to immediately stop from
charging discriminatory prices from the customers.
2) The discriminatory conditions mentioned in the agreement dated
10.06.2008 and any other subsequent agreement to this effect
be changed immediately to allow other competitors of the same
product within the premises of multiplex owned by ILL.
3) A penalty of 5% of the average of the turnover for the last three
preceding financial years is imposed upon M/s ILL and HCCBPL
for deliberately entering into exclusive supply agreement to
foreclose the competition and driving the competitors out of the
- The extract below of a CCI Order saying, "Multiplexes cannot over charge for cold drinks, etc." is the long awaited act from any judicial authority by consumers. In fact consumers courts have time and again failed to reach such a conclusion as CCI. This Order is a lesson to consumer courts in the country on "how to protect consumer interests". It is also an order that needs widest publicity through magazines particularly those feed to consumer protection.
Consumer courts have been very shy of imposing penalties. In this case CCI has imposed a penalty of 50% on the turn over whereas consumer courts feel satisfied with just repairs and replacements.
In the case of cement industry CCI has also shown the path of delivering justice for violation of competition law and indulging in unfair trade practice, and the penalty levied is not only on the cement companies but also on their association and the amount runs into something like Rs.35000 crores, if I am not wrong. Consumers and the activists hope consumer courts take a cue from CCI.
G C Mathur
Convenor-Trustee Treasurer, Binty
( A Voluntary Consumer Organisation)
Regd. Office: H No 9-B/9, 1st Floor
Kishangarh, Vasant Kunj Post Office,
New Delhi: 110070
Tel: +91 11 26136232, 26132420
- Dear Friend,
Thanks. Good information. CCC and all consumer organisations may
disseminate this information through their newsletters.
Amrit Lal Saha
Chairman, Consumer Coordination Council (CCC)
*(A National Coalition of Leading Indian Consumer Organisations)*
*ALLIANCE & INVOLVE - Together Let us Make a Great Indian Consumer
Consumers' Protection Association ( CPA India)
A member of CAGs registered with TRAI
An Investors' Association recognised by SEBI