The Consumer Unity and Trust Society (CUTS), a public policy research and advocacy group, has filed a notice with the Competition Commission of India (CCI) investigating the potential anti-competitive effects of a proposed merger agreement between multiplex chain Inox Leisure. has been urged to do. Ltd. and PVR Ltd.
This March, the boards of PVR Ltd and India’s top two multiplex chains, INOX Leisure Ltd, approved an all-stock merger of the companies to create India’s largest film exhibition entity with a network of over 1,500 screens. Post the merger, INOX promoters will hold 16.66% stake in the combined entity, while PVR founders will hold 10.62%. Ajay Bijli, chairman and managing director of PVR, will serve as the managing director of the merged entity, and Sanjeev Kumar Bijli will be the executive director. Both the companies had earlier insisted that the merged proposal does not require CCI approval as both were closed for months during the pandemic, affecting their combined revenue which is less than Rs. 1,000 crores.
Post the merger, the combined entity, PVR-Inox, will become the largest player in the film exhibition industry in India, eventually leading to their combined market share in most cities in the country, CUTS said in a statement.
PVR-INOX is likely to become the largest player in 43 cities, with a market share of over 50% in at least 19 cities. Competition concerns arising from this, according to the group, include a lack of consumer choice, so consumers have no choice but to have multiplexes owned by PVR-INOX, higher-ticket prices and a possible decline in the quality of food and service. would not be an effective option. In addition, the high bargaining power of PVR-INOX can lead to tougher terms for distributors, food and beverage suppliers, technical equipment suppliers, etc.
“The CCI has a duty to prevent and eliminate practices that have an adverse effect on competition, to promote and maintain competition and to protect the interests of consumers,” CUTS Secretary General Pradeep S Mehta said in a statement.
Had it not been because of the COVID-19 lockdown, the PVR-INOX deal would not have been eligible for exemption from the mandated merger review by the CCI, CUTS said, adding that it has approached the CCI to investigate the matter. The information was filed on 27 July 2022 and the group is awaiting a hearing from the CCI. Furthermore, over the past 12 years, the film exhibition industry has seen gradual consolidation as a result of several mergers and acquisitions, reducing the total number of major players from 11 in 2009–2010 to just five, namely PVR, INOX, Carnival Cinema in 2022. , Cinépolis and Miraj Cinemas reported.
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