The case of M/s. Crown Theatre v. Kerala Film Exhibitors Federation (KFEF), Case No. 16 of 2014 (Decided on 08.09.2015) is another case of the C.C.I. which is probably going to get added to the list of cases which is receiving criticism from the COMPAT in Appeal. Not necessarily on the merits of the case but more so on procedure. After all, the K.F.E.F. is a serial competition law violator and has been found to be guilty of the violation of competition law and fined multiple times before (In fact, even the individuals penalised are the same). The problem is with the way fines are being calculated in this particular case.

Shockingly, the fine, which was supposed to be ten percent of the average turnover of the past three years (Financial years 2011 – 2012, 2012 – 2013, 2013 – 2014) has been calculated only on the basis of the turnover of 2011 – 2012. Section 27 clearly mandates that it must be calculated on the turnover of the last three years. It is not optional for the C.C.I. to calculate it without taking into account one or more financial years. Also, the only explanation which has been provided in the table is “not submitted”, which, while understandable, is not a good enough excuse for the non calculation of any statutory penalty as per the law for which a clear formula has been provided under the Act.

Now as per procedure, the C.C.I. always calls for the financial statements of the past three years without prejudice to the merits of the case of the Respondents, so that in the event they are found guilty, the fine, if any, can be calculated. It is possible that the Respondents herein did not comply with the Order of the Commission and intentionally avoided the submission of the statements before the Commission. Thus, a perfect case for the Commission to exercise powers under Section 43 (or Section 45, as the case may be) under the Act. If there is a genuine and reasonable reason for this omission, then the Commission should have clearly stated the same in the Order.

Either way, it gives the COMPAT a clear cut reason to remand he matter back for reconsideration on the issue of penalty, just like it did in the Gas Cylinder Bid Rigging Case.