Shares of PVR Ltd. and Inox Leisure Ltd. fell after a non-profit advocacy group filed a request with India’s competition regulator, urging it to investigate possible anti-competitive effects of their proposed merger agreement.
In a statement, an arm of the Consumer Unity and Trust Society said PVR is already the largest film exhibition player in India, followed by Inox and the merger will “eventually lead to them having a significant combined market share in most cities in India”.
“PVR-Inox is likely to become the largest player in 43 cities, with market share in excess of 50% in at least 19 cities, consequently substantially increasing the concentration levels.”
The body said such market power will result in possible competition concerns including:
Reduction in consumer choice, that is, consumers will have no effective option but to visit the multiplexes of PVR-Inox.
High-ticket prices, and a possible deterioration in food and service quality.
High bargaining power of PVR-Inox will likely lead to onerous terms for distributors, food and beverage suppliers, technical equipment suppliers, etc.
“The CCI (Competition Commission of India) has a duty to prevent and eliminate practices having an appreciable adverse effect on competition, promote and sustain competition, and protect the interest of consumers,” Pradeep S Mehta, secretary general of Consumer Unity and Trust Society, said in the statement.