2007 (4) TMI 677 - SC - Indian Laws

Supreme Court Upholds Decision on Discriminatory Distributor Agreement

Star India Pvt. Ltd Versus Sea T.V. Network Ltd. & Another

The Supreme Court upheld the Tribunal's decision, finding the Distributor Agreement between Star India Pvt. Ltd. and Moon Network Pvt. Ltd. to be ... Whether in the present case the scheme of Interconnection Regulations has been correctly interpreted? Whether in every matter the Tribunal will examine the written contracts between the parties and ascertain actual prejudice/discrimination and not decide the matter on conceptual basis? Issues Involved:1. Validity and interpretation of the Distributor Agreement between Star India Pvt. Ltd. and Moon Network Pvt. Ltd.2. Compliance with the Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004.3. Alleged discriminatory practice in providing TV signals through an agent who is also a distributor.4. Technical and commercial aspects of the Agreement and its impact on competition.Issue-wise Detailed Analysis:1. Validity and Interpretation of the Distributor Agreement:Star India Pvt. Ltd. entered into a Distributor Agreement with Moon Network Pvt. Ltd. on 8.2.2005, appointing Moon Network as the sole and exclusive distributor of its TV channels in Agra. The Agreement specified that Moon Network would distribute the channels through its cable network, excluding other mediums like DTH, CAS, and Broadband. The Agreement also clarified that Moon Network would act as an independent contractor, not as an agent of Star India Pvt. Ltd. This distinction is crucial as it impacts the interpretation of the relationship under the Interconnection Regulations.2. Compliance with the Interconnection Regulation, 2004:The core issue is whether the Agreement complies with the Interconnection Regulation, which mandates non-discriminatory access to TV signals. Regulation 3.1 and 3.2 require broadcasters to provide signals to all distributors on non-discriminatory terms. Regulation 3.3 allows broadcasters to provide signals either directly or through a designated agent, provided the agent does not act prejudicially to competition. The Agreement between Star India and Moon Network, which made Moon Network the exclusive distributor, was scrutinized for compliance with these regulations.3. Alleged Discriminatory Practice:The Tribunal held that providing signals through an agent who is also a distributor is per se discriminatory. The judgment emphasized that the Agreement between Star India and Moon Network created a competitive disadvantage for other MSOs like Sea T.V. Network. Moon Network, being a competitor, could potentially provide lower quality signals to Sea T.V. Network, affecting its business. The Tribunal found that such an arrangement defeated the objective of the Interconnection Regulation to eliminate monopoly and ensure fair competition.4. Technical and Commercial Aspects of the Agreement:The judgment distinguished between the commercial and technical aspects of the Agreement. Commercially, appointing an agent to collect subscriber data or distribute decoders is not disputed. However, technically, when the agent is also a distributor and a competitor, it raises concerns about signal quality and competition. The judgment noted that signals received through decoders are of better quality than those received through cable feed. The Agreement's exclusivity clause, which limited distribution to Moon Network's cable network, was found to be against the spirit of the Interconnection Regulation, which aims to prevent monopolistic practices.Conclusion:The Supreme Court upheld the Tribunal's decision, finding no merit in the appeal. The judgment affirmed that the Agreement between Star India and Moon Network was discriminatory and violated the Interconnection Regulation. The Court emphasized the need for non-discriminatory access to TV signals and the importance of examining written contracts to ascertain actual prejudice in cases of functional overlap. The appeal was dismissed with no order as to costs.