Non-profit group CUTS has filed a complaint against the proposed merger agreement between multiplex operators PVR and INOX Leisure, alleging that the deal will have anti-competitive effects on the film exhibition industry.
The Consumer Unity & Trust Society (CUTS) has approached the Competition Commission of India (CCI) to investigate the matter, it said in a statement on Thursday. On March 27, PVR and INOX Leisure announced the merger to create the largest multiplex chain in the country with a network of more than 1,500 screens to unlock the opportunities in tier III, IV and V cities, besides in the developed markets.
The combined entity will be named PVR INOX Ltd with the branding of existing screens to continue as PVR and INOX, respectively. New cinemas opened post the merger will be branded as PVR INOX, the companies had said on March 27.
On Thursday, CUTS claimed that had it not been for the COVID lockdowns, the PVR-INOX deal would not have qualified for exemption from the mandatory merger review by the CCI.
Deals beyond certain thresholds require the approval of the regulator.
The non-profit group also claimed that the proposed deal could result in reduced choices for consumers and high ticket prices.
E-mails sent to PVR and INOX seeking comments on the complaint remained unanswered.
According to the statement, the complaint was filed in July and CUTS is waiting to hear from the watchdog.
About the deal, INOX Leisure Ltd Director Siddharth Jain, on March 27, said that in terms of regulatory approvals, "We have been advised there are certain regulatory approvals required, like with Sebi, shareholders approval and NCLT and the others. We have been also advised the CCI pre-notification is not required".
On June 21, PVR and INOX Leisure said they have received clearances for the merger from bourses NSE and BSE.
As per the CUTS release, in the last 12 years, the film exhibition industry has witnessed gradual consolidation and the total number of major players has come down from 11 in 2009-2010 to only 5 in 2022.