Clearances are agreements that cinema chains strike with the studios in order to gain the exclusive right to play a given movie in a particular market. Problem is, this practice is illegal and the Department of Justice Antitrust Division has initiated a probe at the two largest cinema circuits - Regal Entertainment Group and AMC Entertainment Holdings - to see how this practice has stymied competition from competing theater operators.
AMC, in a statement, said the DOJ "wanted information into potentially anticompetitive conduct which we do not believe we violated and are cooperating with the governmental authorities."
The DOJ's civil investigative demands, received by AMC and Regal on May 28th, "gave it subpoena power and request for documents and answers to certain questions regarding the practice of clearance". AMC and Regal also received additional civil investigative demands from the Office of the Attorney General of Ohio, which has similar inquiry under Ohio's antitrust laws.
Regal, in a statement, said that it had been asked by the DOJ to "preserve all documents and information since January 2011 relating to movie clearances or communications or cooperation" between the company and its chief rivals, AMC and Cinemark Holdings Inc. We do not believe that any investigation of movie clearances or any communications or cooperation involving the Company and AMC or Cinemark will produce evidence that the Company has engaged in any anticompetitive conduct in violation of Federal or State antitrust or competition laws.
Come on guys, the clearance issue has been around and practiced for years, and has been complained about for years by many independent cinema exhibitors. The National Assoc. of Theater Owners (NATO) has also known about this for years - and did nothing about it. Not a peek.
It now appears that the practice has become so widespread that it finally couldn't be ignored by the DOJ and State regulators. The increase in clearance requests by the large circuits has coincided with a rise in cinema construction, and sufferers of the practice say it allows the larger chains to wield significant market power and drive new and existing smaller competitors out of business. AMC, Regal, and Cinemark have commented that clearances are part of a long-standing and established industry practice that only affects a small number of their locations.
Well, just because something is done doesn't mean it's right or, for that matter, legal. As I said, clearance has been going on for years and everyone in the industry knew it was happening and knew it was wrong. Clearances should not be granted and the practice needs to be stopped - a large civil judgment against the large circuits may be what will end it.
Jim
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