New Delhi:Broadcasters Zee Entertainment Enterprises Ltd and Star India Pvt. Ltd have responded to queries raised by the Competition Commission of India (CCI), the country’s antitrust watchdog, on possible cartelization by their content distribution joint venture (JV) that was established six months ago.
The director general (DG) of CCI will on Monday hear the matter related to Media Pro Enterprise India Pvt. Ltd, a 50:50 joint venture between the distribution arms of the broadcasters—Star Den Media Services Pvt. Ltd and Zee Turner Ltd.
Media Pro was expected to offer over 70 television channels to cable operators.
“The DG had sought around 24 responses from the parties, including details on distribution channels, their earnings, growth, etc., and all the details have been supplied,” said a person aware of the development, who spoke on condition of anonymity. “The commission is investigating the joint venture under section 3 of the Competition Act that deals with cartelization.”
Gurjeev Singh, chief operating officer, Media Pro, and Arun Kapoor, its chief executive, did not respond to queries sent on Friday.
Media Pro was formed before June and did not require CCI’s prior approval.
The ministry of corporate affairs in June notified that any merger or acquisition above a particular threshold in terms of assets or turnover should take prior approval of CCI before executing the deal.
Accordingly, companies with either combined sales of Rs 4,500 crore or assets of Rs 1,500 crore have to take CCI approval before signing a JV agreement.
Based on a complaint that the JV between Star and Zee will affect consumers adversely as they will become a strong organization and can influence prices, CCI ordered its DG to look into the matter.
“After examining that the JV may lead to control of the market relating to sale and distribution of channels and thereby affecting prices, CCI ordered a DG inquiry,” a CCI official said, requesting anonymity. “Based on the finding of the DG, CCI will take a call.”
If CCI finds the JV is an anti-competitive move, it can impose a cease and desist order or a penalty on it.
“While CCI has the mandate to investigate a JV, which may have an adverse effect on competition, a lot will depend on the evidence brought out by the respondents (Star and Zee) in terms of empirical data that the JV has been formed to enhance economic efficiency in the market,” said competition law expert Manas Kumar Chaudhuri, partner at law firm Khaitan and Co. Llp.
Abhilasha Ojha contributed to this story.