Analysis of CCI’S Order Against BookMyShow and The Increasing Accountability of Intermediaries
[Nardeep is a student at Maharashtra National Law University, Mumbai.]
On 16 June 2022, the Competition Commission of India (CCI) directed an investigation against Big Tree Entertainment Private Limited (BookMyShow) for allegedly abusing its dominant position under Section 4 of the Competition Act 2002 (Competition Act). The contentions raised by a social worker who is also a founder of an online ticket booking platform called “Showtyme” was that BookMyShow abused its dominant market position by entering into exclusive agreements with cinemas and multiplexes and used cash deposits and loans as leverage to create an impenetrable market.
BookMyShow in its reply submitted that they are merely an intermediary platform facilitating movie ticket bookings – and that there was no separate “market” for online bookings as the market is too wide to comprise physical bookings at the cinemas as well as other players such as PayTM, justticket.com, ticket4u.com and websites of cinema multiplexes like PVR, INOX, CINEPOLIS, etc. BookMyShow also contended that it was not “dominant” as it had a market share of only 20% in the last 5 years. Lastly, BookMyShow argued that it does not provide any monetary support in return for exclusivity - rather it only provides security deposits to adjust the ticket price and revenue share to the cinema theatres.
CCI’S CONSISTENCY IN OBSERVATIONS
The CCI was not so convinced by the ticket booking platform’s arguments and decided against its contentions, one by one countering them in a reasoned and consistent manner. Firstly, the CCIobserved that there exists a separate market for online bookings of movie tickets in which BookMyShow, is the most well-known and used platform. Further, the CCI iterated that online websites of multiplexes, single-screen theatres, or even the box office cannot provide the same services for the booking of movie tickets as BookMyShow. Using the internet intermediation services of the intermediary platforms, a customer can search for and compare a variety of theatres and movies, as well as the ticket pricing, other offerings, and the seats available for a given show. Therefore, the CCI decided to define the relevant product market as the “market for online intermediation services for booking of movie tickets”.
Secondly, the CCI on determinisation of dominance, looked at information that was already in the public domain rather than the data provided by BookMyShow. The CCI took into account the Kalagato Report, which stated that PayTM had a market share of 13 percent and BookMyShow had a market share of 78 percent as per online movie ticket booking volume in the period from January to March 2017. Additionally, the CCI took into account a media report from December 2018 that stated BookMyShow had a market share of between 70 and 75 percent for movie tickets.
Thirdly, the CCI noted that BookMyShow's ability to sign exclusive contracts within India demonstrates the position of strength it enjoys, and the various clauses in its agreements with movie theatres and multiplexes demonstrate its superior negotiating power when determining contractual terms. The CCI showed exceptional commitment to pursue big tech and big players after choosing to rely upon independent research studies about the market share rather relying solely on BookMyShow’s contentions. The CCI also drew a clear-cut distinction between the broader intermediatory market and the narrower ticket booking market. The CCI drew attention to the fact that BookMyShow had not provided information on its market share for its online intermediary services for purchasing movie tickets in India. Instead, BookMyShow had provided information on the number of tickets sold, which indicated total yearly footfalls rather than the money value of tickets. Such records were reportedly untenable and inconsistent for computing BookMyShow's market share even in the broader intermediary market, per its own contentions.
EXCLUSIVITY IS THE PRICE
On the questions of abuse of dominance, the CCI took into account the various agreements signed between BookMyShow and the single screen theatres and noted that the exclusive agreements with single screen cinema theatres do not permit these cinemas to engage anybody directly or indirectly for services that are similar to those of BookMyShow or for facilitating the booking/sale of tickets through any online medium. This is because they may force competing intermediary platforms or new entrants to incur sizable additional costs to persuade theatres to renounce their exclusive contracts with the dominant platform with market power. Therefore, such exclusive agreements carry potential to close or reduce competition in the relevant market.
The CCI also noted that the security deposits were used to create an exclusive market thereby restricting other market players. A similar decision was taken in the CCI’s enquiry against MakeMyTrip back in 9 March 2021, wherein the CCI had passed interim reliefs for Treebo and Fabhotels as MakeMyTrip had delisted the properties by Treebo and Fabhotels from their platform after they had signed an agreement with OYO Hotels (OYO). It may be noted that these hotel chains were seen as competitors to OYO. The CCI had noted that the continuation of exclusionary contractual terms between MakeMyTrip and OYO may change the competition landscape and tip the markets in favour of the two companies.
In view of the above, while the BookMyShow case prima facie appears to be a case of abuse of dominant position in the market, the final enquiry can reveal greater facts about the circumstances in which these exclusive contracts were signed and whether imbalanced bargaining powers were used by BookMyShow to garner more competitive advantage. Furthermore, it is pertinent to note that the competition watchdog is not hesitant to go after big names, and that too - on the application of a common man. The CCI acted with resilience on asking BookMyShow to submit its reply to the allegations. Further to what seems to be a careful perusal, the CCI passed an order of enquiry under Section 26(1) of the Competition Act (CCI Order). The CCI in its ending remarks also noted that although there is a clause for exchanging data in the contracts BookMyShow has with multiplexes, BookMyShow has reserved the right to data collection, ownership, and storage without the cinemas having any right, title, or interest in such data. The exclusive possession of, and access to data by a dominant intermediary demands scrutiny since it has the potential to significantly bolster the platform's negotiating leverage over time. This shows that there is now growing responsibility upon intermediary platforms to act in a fair manner and not abuse their middleman status bereft of any business responsibilities. It is relevant to note, that the earlier case of MakeMyTrip had indicated that intermediaries are often inclined to engage in unfair market practises through exclusive dealings for greater market share. Arguably, the CCI Order in the present case is a positive step towards better antitrust regulation, particularly in an age where market participants rely increasingly on technology as a tool of business dominance.