edition on Tuesday, May 24, 2011 reported that the Star TV and Zee Network are joining hands for distribution of their television channels. Both the networks, which have in their portfolios television channels with the highest viewer ship in the country, presently distribute channels through their own respective joint ventures, Zee Turner Limited and StarDen for Zee Network and Star TV respectively. This proposed joint venture between two top television companies could have serious impact on the Cable TV industry of the country; it would not only affect the Cable TV distributors and DTH operators but also the local Cable TV operators and the end consumers. New Delhi
This proposed joint venture, poses a serious challenge to the Competition law, as there is clear cut absence regarding the status of the joint ventures in the Act. Although, the Act talks about the cartels, but proviso to subsection (3) of Section 3 of the Competition Act, 2002 provides that:
“Provided that nothing contained in this sub-section shall apply to any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services.”
Which will clear cut provide a defense to the companies to claim that their JV is in nature of “increasing efficiency” of distribution, as Mint reports quoting an unnamed Zee TV executive “move should be seen in view of the growing piracy of broadcasters’ signals as well as the monopoly of large cable networks in some markets such as Punjab and Tamil Nadu. Some states are monopolized by a single operator and we find it hard to collect subscription fees”. It is an open secret that cable TV signals are being pirated and in many instances mafia controls the cable TV operations, however by making the consumer pay by their nose is any solution.
Such move will only lead to cartelization by the broadcasters to increase the revenues. Such cartel will not only squeeze cable TV operators but also increase the subscription rate, which will give no leeway to the consumer to seek recourse.
The report further states other broadcasters might also join this joint venture, making it near monopoly situation in the market. Further, it is also believed, as the report states, that the both companies are scrambling to declare their JV before June 1st, when the Combination regulations comes into force, thereby bypassing the law.
However, as it is stated earlier, that the law regarding to Joint Ventures is vague and can form a grey area in the Competition Act. But if this joint venture happens, it will surely will one of the greatest challenges to the emerging field of Competition law in the country.
© Tarun Mitra
May 25, 2011