Why the Competition Commission cleared BookMyShow of market dominance abuse charges

CCI BookMyShow antitrust case: The Competition Commission of India (CCI) on Thursday (March 12) closed an antitrust case against Big Tree Entertainment Pvt. Ltd., the parent company of the movie ticketing platform BookMyShow. The case, initiated by a rival ticketing portal, accused BookMyShow of abusing its dominant market position to stifle competition and lock out new players. After a detailed investigation, the CCI ruled that BookMyShow’s business practices, including its exclusive contracts with cinemas, were driven by legitimate commercial and technological needs rather than anti-competitive intent. The allegations The complaint was filed in 2021 by Vijay Gopal, the founder of a ticketing portal named Showtyme. He alleged that BookMyShow, which commands a massive market share in India, was signing exclusive contracts with cinemas to maintain a monopoly. According to the complaint, BookMyShow offered cash loans and monetary deposits at “zero interest” to single-screen theatres and multiplexes. In return, these cinemas were allegedly locked into exclusive agreements lasting two to five years, preventing them from selling tickets on rival platforms like Showtyme. The complaint also alleged that BookMyShow charged exorbitant “convenience fees” from consumers and shared a portion of this revenue with the cinemas. Showtyme claimed that despite offering better commission rates to theatres, it was unable to partner with them because they were bound by BookMyShow’s restrictive agreements and debt obligations. The legal framework Under the Competition Act, 2002, it is illegal for an enterprise to abuse its “dominant position” by imposing unfair or discriminatory conditions or by denying market access to competitors. To decide the case, the CCI first had to determine the “relevant market” for the case and whether BookMyShow was actually dominant in it. The CCI’s investigative authority, the Director General (DG), found that booking tickets at a physical box office is fundamentally different from online booking in terms of consumer convenience and choice. Agreeing with this, the CCI defined the relevant market as the “market for online intermediation services for booking of movie tickets in India.” Looking at BookMyShow’s large consumer base, network effects and scale of operations, the Commission agreed with another of the DG’s findings – that the platform holds a dominant position in this market. Commission’s reasoning While the DG concluded that BookMyShow was abusing its dominance through exclusive agreements and discriminatory practices, the CCI ultimately disagreed with its findings. The Commission dismantled the allegations on four main fronts. The first allegation was that BookMyShow forced single-screen cinemas to reserve a portion of their seats exclusively for its platform. The CCI found merit in BookMyShow’s defence that this was a technological necessity. In Tier 2 and Tier 3 cities, where cinemas lack real-time ticketing software, reserving seats for a limited period “becomes necessary in order to avoid overlapping of ticket bookings between what is sold at the box-office and on [BookMyShow’s] platform,” the Commission noted. Secondly, the DG held that BookMyShow had engaged in discriminatory behaviour because it co-owned customer data with large multiplexes, but only shared anonymised data with single-screen cinemas. The CCI rejected this, explaining that the Competition Act only prohibits unequal treatment among “like” entities. It noted that single-screen cinemas and multiplexes “do not constitute a single, homogenous class” and “differ materially in terms of infrastructure, ability to handle customer data securely, amenities, operational costs, and the overall quality of services offered.” Therefore, treating them differently did not amount to “discriminatory abuse”. Thirdly, the DG had flagged that BookMyShow shared different percentages of its convenience fee with different cinemas. But the Commission dismissed this, accepting that revenue-sharing arrangements depend on multiple business factors, including the size, scale and operational costs of the cinema. The fourth and most critical question was whether BookMyShow’s exclusive agreements and security deposits denied market access to rivals. The CCI ruled that the “lock-in” periods in these contracts were a legitimate business practice. Here, it agreed with BookMyShow’s operational justification that “the duration of the lock-in period is calibrated to the quantum of the security deposit extended to the cinemas, through which, [BookMyShow] is afforded a reasonable opportunity to recoup its financial outlay.” The CCI stated that these agreements expire at different times, meaning that “for a new entrant there would always be an availability of cinemas with whom they can explore new business arrangements.” Noting the active presence of competitors like Paytm and Justickets and instances of cinemas having successfully shifted away from BookMyShow, the CCI concluded that “the market cannot be considered effectively foreclosed for new competitors”. Having found no demonstrable anti-competitive effects, the CCI ruled that BookMyShow had not contravened the Competition Act.