Supreme Court Clarifies Competition Law: Kerala Film Exhibitors Federation Guilty of Anti-Competitive Practices, Penalties on Office Bearers Restored

Case Name: Competition Commission of India v. Kerala Film Exhibitors Federation & Ors.
Date of Judgment: September 26, 2025
Citation: 2025 INSC 1167, Civil Appeal No. 9726 of 2016
Bench: Hon’ble Mr. Justice Manoj Misra and Hon’ble Mr. Justice K.V. Viswanathan

Held: The Supreme Court allowed the appeal filed by the Competition Commission of India and restored penalties on the office bearers of the Kerala Film Exhibitors Federation who were earlier exonerated by the COMPAT. It held that the Federation’s conduct in directing distributors not to supply films to Crown Theatre, which had resigned from the Federation, amounted to a collective boycott and was a clear violation of Section 3(1) read with Section 3(3)(b) of the Competition Act, 2002. The Court clarified that liability under Section 48 extends to office bearers in charge of and responsible for the conduct of an association’s affairs and that the requirement of natural justice is satisfied if they are given notice of contravention and an opportunity to respond. A separate notice exclusively on penalty was held unnecessary once they were specifically named and issued directions to show cause.

Summary: The case arose when the Federation, a trade body of exhibitors, issued directions restraining distributors from supplying films to Crown Theatre after its resignation from membership. The CCI, relying on the Director General’s investigation, concluded that this constituted an anti-competitive agreement causing an appreciable adverse effect on competition. It imposed penalties both on the Federation and on its key office bearers, the President and General Secretary, while also issuing behavioural remedies restraining them from associating with the Federation for two years. On appeal, COMPAT upheld the finding of contravention against the Federation but set aside the penalties against the office bearers, reasoning that no separate penalty notice had been served. The Supreme Court reversed this finding, holding that the notices served, which called upon the office bearers to reply to the allegations, furnish audited accounts, and personally appear, constituted adequate compliance with principles of natural justice. The Court observed that the scheme of Sections 26, 27, and 48, read with the CCI Regulations, does not envisage a two-tier notice system. It emphasized that office bearers actively involved in decision-making cannot escape liability by pointing to technicalities. The Court also highlighted that the Competition Act is more robust than the repealed MRTP Act and equips the CCI to impose both behavioural and monetary remedies to ensure deterrence against cartelisation and collective boycotts.

Decision: The Supreme Court restored the CCI’s original order imposing penalties and disqualification measures against the President and General Secretary of the Federation, while affirming the findings against the Federation itself. It reiterated that accountability of individual decision makers is critical in ensuring effective enforcement of competition law, and penalties against them were proportionate and justified in the circumstances.