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Competition Commission of India V. Kerala Film Exhibitors
Civil Appeal No. 9726 of
2016
Dated 26th September
2025
On 26th September 2025, the Hon'ble Supreme Court of India delivered a significant judgment, setting aside the ruling of the Competition Appellate Tribunal (“COMPAT”) and restoring the original order of the Competition Commission of India (“CCI”). The ruling clarifies the procedural requirements for imposing penalties on individuals under the Competition Act, 2002.
Background of the Dispute
A complaint was filed by the Crown Theatre with the CCI. The complaint alleged that the Kerala Film Exhibitors Federation (“KFEF”) and its office bearers engaged in anti-competitive practices, specifically using threats and boycotts to prevent film distributors from supplying films to Crown Theatre.
The Director General (“DG”) investigated the matter and found sufficient evidence of anti-competitive conduct, concluding that the KFEF and its office bearers have violated Section 3(3) of the Competition Act.
Original CCI Order and Appellate Proceedings
The CCI conducted an investigation and issued its Final Order. The CCI directed the KFEF to cease anti-competitive conduct, pay a penalty equal to 10% of its average income for three years and organize competition awareness programs. Further, the office bearers were also penalized and were directed to pay a penalty of 10% of their average income for three years. The office bearers were also barred from associating with the KFEF for two years.
KFEF and its office bearers appealed the decision to COMPAT. While COMPAT upheld the findings of the CCI, it set aside the penalties and directions against the office bearers. COMPAT held that the CCI violated the principles of natural justice as it did not provide a separate notice proposing penalties and debarment to the office bearers. Further, the CCI did not provide an opportunity of hearing to the office bearers.
Observations of the Supreme Court
The issue before the Supreme Court was whether the initial show cause notice issued by the CCI constituted a sufficient intimation of hearing opportunity, or whether a second show cause notice was required before imposing penalties under Section 27 of the Competition Act.
The Supreme Court restored the original order of the CCI, setting aside the judgment of the COMPAT. It held that the initial notice and opportunity to respond to that notice is sufficient before imposing penalties for anti-competitive conduct under the Competition Act. There was no requirement or mandate under the law for a second notice. The penalty and behavioural remedies (including the two-year debarment) were valid, proportional, and necessary to deter anticompetitive practices.
The Supreme Court emphasized the importance of deterrent penalties and upheld the authority of the CCI to impose both monetary and behavioural remedies on organizations and individuals involved in anti-competitive practices.
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