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Summary: CCI orders antitrust investigation into movie ticketing app BookMyShow

CCI ordered a detailed investigation into online ticketing platform BookMyShow following a complaint from Vijay Gopal of Showtyme

The Competition Commission of India (CCI) on June 16 ordered a detailed investigation into BookMyShow, an online ticketing platform, following a complaint from Vijay Gopal, who runs a rival movie ticketing platform called Showtyme. BookMyShow is acting in collusion with theatres by having exclusive agreements to not sell movie tickets online through anyone else and giving lakhs and crores of rupees on loans at zero interest, leaving no scope for the new entrants to enter into the market, Showtyme alleged in its complaint. After studying Showtyme’s allegations and BookMyShow’s responses to them, CCI noted that there exists a prima facie case with respect to the conduct of BookMyShow, which requires an investigation by the Director-General to determine whether the conduct of BookMyShow has resulted in contravention of the provisions of Section 4 of the Competition Act.

Why does this matter? BookMyShow has been the go-to ticketing app for movies for over a decade now. While many competitors like Zoonga, Paytm, Insider (now Paytm Insider), etc. have cropped up over the years, none have been able to gain the popularity of Reliance-backed BookMyShow. As far back as 2013, when BookMyShow signed a deal with PVR to be the multiplex chain’s “Preferred e-ticketing channel partner,” we wrote about the dominance of BookMyShow. The CCI investigation can shed more light on whether this dominance is due to competitive merits, as claimed by the CEO of BookMyShow in an interview with MediaNama, or anticompetitive conduct, as claimed by Showtyme.

“When an aggregator becomes the dominant force, it begins to put the squeeze on the margins for partners […] As online ticketing grows, theatres will realise that they are becoming increasingly dependent on BookMyShow, easily the single largest player in the space, because that is where they will source customers from. From a theatre’s perspective, they need to tie up with more online ticketing sites, because an increased dependency on a single player will create a monopoly. Think about it this way – if BookMyShow (hypothetically) decides not to allow tickets for a theater, what will they do?” — Nikhil Pahwa wrote from MediaNama back in 2013

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What were the allegations made against BookMyShow?

Showtyme alleged that BookMyShow holds at least 90% market share in the movie ticket booking industry in India and is abusing its dominant position under Section 4 of the Competition Act by imposing the following unfair and discriminatory conditions on theatres:

BookMyShow has signed exclusive and refusal to deal agreements with theatres: Showtyme alleged that BookMyShow has signed exclusive deals with theatres like Asian Cinemas, Indra Cinemas, Cinepolis, INOX, and PVR, owing to which these theatres sell their movie tickets through BookMyShow only. They have also signed “refusal to deal” agreements ranging between 2-5 years with the theatres to ensure theatres don’t sell on any other platform, Showtyme added.

“The Informant has stated that Showtyme approached more than 30 cinemas and theatre managements in person and all multiplexes via email, in Hyderabad. Some of them confirmed that they could not sell their tickets to Showtyme since they had taken monetary deposits and signed exclusive agreements with BookMyShow. According to the Informant, this has created a barrier to new entrants like Showtyme and higher prices to the end-consumers.” — CCI order

BookMyShow has offered zero-interest loans to theatres: Showtyme alleged that multiplexes and theatres are unable to associate with Showtyme due to cash loans and monetary deposits given by BookMyShow to the theatres on zero interest. The complainant claimed that BookMyShow is acting in collusion with theatres through this conduct.

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Consumers are paying higher prices for tickets: Showtyme explained that BookMyShow collects Rs. 25 per ticket as a convenience fee from consumers and shares 50% of the convenience fee as a commission (up to Rs. 12-14 per ticket) with multiplexes and up to Rs. 6-8 per ticket in case of single-screen theatres. On the other hand, Showtyme was looking to charge a lower convenience fee of Rs. 11 per ticket and share up to Rs. 5 with the theatres. But despite these lower fees, theatres are sticking with BookMyShow for the reasons laid out above, which is detrimental to consumers.

“The Informant has averred that BookMyShow has formed an explicit cartel with multiplexes and theatres and pursuant to which it has signed agreements with them to thwart any opportunity to other platforms to sell tickets of cinema, even at 50 % lesser convenience fee than that of BookMyShow, and thereby controlling the movie ticketing industry and has imposed barriers for new entrants like the Informant.” — CCI order

Unlawful reservation of more than half the tickets: Showtyme alleged that the owner of Sudarshan Theatre, who is also the Vice President of the Telangana State Film Chamber of Commerce, has allowed placement of more than 50% of tickets for sale through BookMyShow, which is in violation of a 2006 order issued by Telangana State Home Department that provides for reserving at least 50% of the tickets for sale in the licensed booking office at the cinema theatre.

What was BookMyShow’s response to the allegations?

In response to the allegations made by Showtyme, BookMyShow responded to CCI with the following:

BookMyShow’s share of the market has not exceeded 20 percent: Contrary to the 90% claim made by Showtyme, BookyMyShow claimed that its market share in the movie ticket booking industry in India has not exceeded 20% in the last 5 years, and any market share below 30% cannot be considered to confer any market power, let alone any dominance to cause any appreciable adverse effect on competition (AAEC).

Exclusivity benefits theatres and many theatres are still available for competitors to collaborate with: BookMyShow said that it is relatively a new entrant and in order to penetrate the market it had to tie up with certain cinema theatres on an exclusive basis. This exclusivity also benefits the theatres as they do not have the resources to make tickets available online through their own website or other modes, BookMyShow claimed. Furthermore, out of approximately 9500 cinema theatre screens in India, BookMyShow only has exclusive arrangements with a certain number of them, leaving the rest of the theatres available for competitors to collaborate with. Moreover, the duration of these agreements is short-ranging, BookMyShow said. The exact numbers shared by BookMyShow regarding the number of exclusive agreements and duration were redacted in the CCI order.

No monetary incentive is provided to theatres, only a security deposit: BookMyShow stated that it provides no monetary incentives to any of the theatres with which it has an association. “In certain cases, it only provides some security deposit to adjust the ticket price and revenue share to the cinema theatres. These arrangements exist even with cinema theatres with whom no exclusive agreements have been signed and these are purely in the nature of securing payment obligations for cinemas and not advanced to them to secure exclusive booking rights,” BookMyShow said.

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Many competitors out there: BookMyShow said that cinemas like PVR, INOX, and Cinepolis run their own online and physical ticketing portals and there are also other third-party online platforms like Paytm, ticketnew.com, justicket.com, ticket4u.in that compete with BookMyShow.

No formal agreement on ticket allocation: BookMyShow said that there is no formal or informal agreement or understanding which decides what proportion of a theatre’s monthly tickets would be sold through BookMyShow.

Showtyme approached CCI with “unclean hands”: BookMyShow alleged that Showtyme launched a website on 09.11.2021, but filed the complaint with CCI on 02.11.2021.  “The Informant filed the information even before the launch of its website. The website should have been in operation for at least a certain amount of time to experience the competition in the market from various players including BookMyShow. Thus, the question of causing harm to the Informant does not arise,” BookMyShow remarked.

Complaint filed with the intention to harm the reputation of BookMyShow: Showtyme filed the complaint with the “intention of creating obstacles and damaging reputation of BookMyShow under the garb of public cause and furthering his [Vijay Gopal’s] own commercial interests,” BookMyShow alleged. Gopal is engaged in forum shopping and vexatious litigation and has filed various criminal complaints, civil cases and representations before various judicial and executive authorities where he could not achieve the desired results, BookMyShow further alleged.

The convenience fee is transparent: The convenience fee is determined on the basis of third-party charges, operational costs, infrastructural investments etc. and is distinctly displayed on the website and app of BookMyShow. Consumers avail of the services with full knowledge of the charges payable. Besides, the consumer has a choice to purchase the ticket from the Box Office directly, BookMyShow said.

Violation of government order is not a CCI concern: As for Showtyme’s allegation that BookMyShow is in violation of the Telangana government’s order on ticket quota, BookMyShow submitted that the alleged violation is not a competition law concern.

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Redacted information: BookMyShow also shared information on the following aspects, but the CCI order redacted them, presumably on BookMyShow’s request for confidentiality:

  • Information of the share of the value of tickets booked through BookMyShow against the value of tickets sold in India for the last 5 years
  • Number of agreements with single cinema theatres in Telangana and sample agreements with some single-screen cinemas
  • Copy of the agreements with PVR, INOX, and Cinepolis

What was CCI’s analysis of the arguments made above?

Defining relevant market: Before looking into potential anticompetitive conduct, CCI first identifies the relevant market. On this, BookMyShow suggested the relevant market as the “sale of movie tickets in India.” CCI, however, noted that online booking services for movie tickets are not interchangeable or substitutable with offline modes. CCI further noted the services provided by an online intermediation platform like BookMyShow cannot be offered in the same manner either by the online sites of multiplexes/single-screen cinemas or even by the Box Office because intermediation services allow customers to search for and compare an array of theatres and movies. As for the geographic market, since BookMyShow is available pan-India and the platform faces similar competitive constraints and homogeneous conditions of competition throughout India, CCI noted that the entire country can be considered. Taking into account all these factors, CCI delineated the relevant market as the “market for online intermediation services for booking of movie tickets in India.”

BookMyShow prima facie appears to be the dominant player: CCI said that the data given by BookMyShow regarding its share of tickets is “untenable and inconsistent for computation of market share of BookMyShow even in the wider market proposed by it” because it was found that the value of total tickets, as presented by BookMyShow, is the number of tickets sold, indicating total yearly footfalls and not the value of tickets in INR crores. In the absence of reliable market share data on record, CCI used data available as per a Kalagato report, which shows BookMyShow’s share in online booking of movie tickets, in terms of booking volume, was 78%, followed by Paytm with a market share of 13% in 2017. CCI further noted that Paytm is a relatively new player, having entered the online movie ticketing market in 2016, as against BookMyShow, which has been in this space since 2007. Based on these factors, it prima facie appears that BookMyShow enjoys a dominant position in the relevant market, CCI said.

“The Commission observes that market share is one of the many factors that are considered in the assessment of dominance. In the instant case, the market share of the platform needs to be seen in conjunction with its reach, scale and the network effects that work in its favour, leading to huge consumer footfalls thereby making a presence on the platform critical for visibility and competitive ability of cinema theatres. The ability of BookMyShow to enter into exclusive agreements within India, as stated in its reply, further corroborates its position of strength and the various provisions in its agreements with cinema theatres/multiplexes, indicating its superior bargaining power in deciding contractual terms.” — CCI order

Exclusive agreements have the potential to foreclose competition:  BookMyShow stated that it has exclusive agreements with some theatres. “Such exclusive agreements have the potential to foreclose or reduce competition in the relevant market, as they may make rival intermediary platforms or new entrants incur significant additional costs to induce the cinemas to give up their exclusive contracts with the leading platform with market power. In addition, the agreements with major multiplexes also appear to be of restrictive nature, which does not only curtail the freedom of these multiplexes but may also directly or indirectly incentivise exclusivity and/or restrict choice,” CCI said.

Security deposit dissuades theatres from going to another platform: “The Commission is not persuaded by the averments made by BookMyShow that its security deposit is towards payment obligations to exhibitors with whom it has contracted for providing online intermediation service for ticket booking. On perusal of certain clauses of the agreement … [it] prima facie indicates an attempt to disincentivise and thereby dissuade exhibitors to associate with any platform other than BookMyShow,” CCI observed

“The exclusive and restrictive agreements with single-screen cinemas and multiplexes, in conjunction, prima facie appear to have the potential of denying market access to competing platforms and potential entrants. The cinema theatres, as well as the cinegoers alike, are restricted in their choice of alternate ticketing platforms, during the working of the contracts that BookMyShow has with large number of theatres/ multiplex chains.” — CCI order

BookMyShow’s data collection practices merit investigation: “A perusal of the clauses of the agreements with single-screen cinemas indicate that BookMyShow has reserved the right of data collection, ownership and storage thereof without the cinemas having any right, title, interest to such data, though in the agreements that BookMyShow has with multiplexes, there is provision for sharing of data. […] The Commission is of the view that exclusivity relating to data ownership can increase the bargaining power of the platform over time. Data further strengthens and entrenches the network effects limiting inter-platform competition. In a dynamic sense, this would imply that BookMyShow would earn monopoly rents, going forward. The aspect of exclusive ownership of and access to data by a dominant intermediary merits investigation,” CCI noted. CCI further cited the following statement made by the founder of BookMyShow in an interview to support its observation:

“We have a loyal and sticky customer base and we know about their payment modes, other details, and movie preferences. We are sitting on India’s 80-90 million customers on top and data monetization is another piece, which is very integral to BookMyShow.”

CCI cannot act as a price regulator: As for the allegation that BookMyShow is charging a high convenience fee from consumers, the Commission noted that it cannot act as a price regulator to determine the correct fee. “Nevertheless, exclusivity arrangements by BookMyShow may result in softening of competition and therefore bolster the market power of BookMyShow without any incentive for it to lower such fees in future,” CCI said.

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What does Showtyme seek?

Showtyme has asked CCI to grant the following reliefs:

  1. Declare the agreements between BookMyShow and Asian Cinemas, Indra Cinemas, Cinepolis, INOX, PVR, and Sudarshan Theatre as illegal and anti-competitive
  2. Impose penalty as under Section 27 of the Competition Act;
  3. Direct BookMyShow under Section 28 of the Act to sell not more than 25% of its tickets of any theatres in the State of Telangana and Andhra Pradesh and not more than 50% of the tickets in the rest of India on its platform
  4. Reimburse the litigation cost of Rs. 5000 and Rs. 1 for the mental trauma caused
  5. Direct BookMyShow and all theatres in India to discontinue practices of “not dealing with others”

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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