The Competition Commission of India (CCI) has rejected a complaint against the proposed merger of multiplex chains PVR and INOX Leisure.
Rejecting the merger, the CCI said that apprehension of likelihood of anti-competitive practices by an entity cannot be a subject of probe.
The recent order from the watchdog arrived on a complaint that was filed against the proposed merger that would create the country’s largest multiplex chain with a network of more than 1,500 screens.
PVR and INOX Leisure announced the merger on March 27 this year. Though, both the entities were not required to seek CCI approval for the deal as it was below the regulator’s threshold levels.
As per norms, the deals beyond certain thresholds require clearance from the regulator under the competition law.
The regulator in its seven-page order said that it was of the view that the apprehension of likelihood of AAEC (Appreciable Adverse Effect on Competition) by an entity that is yet to take form cannot be a subject matter of inquiry/investigation under Section 3 or 4 of the Competition Act.
CCI’s Section 3 pertains to anti-competitive agreements and Section 4 relates to abuse of dominant position.
The regulator also made it clear in the order that post-facto if any matter of abusive conduct comes up, then that could be examined under the provisions of the Act.
Section 3 provides for examination of likelihood of AAEC arising of conduct in terms of an agreement, not a likelihood of conduct itself, the CCI noted.
“This kind of an assessment is ex-ante, which can be undertaken by the Commission in appropriate cases, when legal requirements for such examination are attracted in the first place,” CCI said.
“Therefore, the Commission is of the view that conduct, much less of an anti-competitive nature, is found to be missing in the present case for an analysis from the standpoint of provisions of Section 3 or 4 of the Act,” the order added.
On the issue of PVR-INOX Leisure becoming a dominant entity in the future, CCI said the proposed transaction has not even been consummated to give legal status to the new entity.
“Thus, firstly, no entity, much less a dominant entity, is in existence, even for assessment of conduct in the present case. Secondly, even if the proposed transaction is concluded, dominance per se is not anti-competitive and only conduct is, if the same falls within the provisions of Section 4 of the Act,” it noted.
