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COMPETITION/FILM INDUSTRY: COMMISSION STILL REVIEWING UIP'S JOINT VENTURE EXEMPTION.

Summary:The European Commission is still considering whether or not to renew a previous exemption from EU rules on restrictive business practices that United International Pictures' joint venture (which markets films in Europe for three major Hollywood studios) has enjoyed for over ten years. The Commission's Competition Directorate-General, DG IV, warned UIP in January 1998 that it had not found sufficient grounds for renewing an exemption from Article 85 of the EC Treaty previously granted in 1988 for just five years - a time limit which UIP has been contesting ever since. If confirmed, the Commission's move would force the British-based joint venture to wind down, leaving Metro-Goldwyn-Mayer, Paramount and Universal to distribute their films separately in the European Union.

UIP disagrees with the Commission's conclusions that the joint selling of films is anti-competitive, arguing that it has over the years contributed to developing the European film industry by helping distribute European film productions as well. UIP's defence could, arguably, be that it has contributed to Europe's indigenous film industry. Its derogation from EU competition states that exemption from the provisions of Article 85 could be possible if (the parties) "contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing customers a fair share of the resulting benefit".

The Commission spokesman noted there had been a hearing, at UIP's request, on September 24, 1998, but that a final decision was not yet within reach. Although there has been much talk, especially in France, about the dominance of the Hollywood film industry, there have apparently been no formal complaints against the UIP arrangement, as EU Competition Commissioner Karel Van Miert himself recognised last year. The Commission is probably monitoring events in the US and taking its time to decide. In the United States, the Justice Department is also probing the marketing tactics of the studios, which are often accused of imposing their wishes on exhibitors. Allegations include 'block booking' or the practice of tying blockbuster movies to box office flops. UIP Vice-President and general counsel Brian Reilly told journalists recently that he hoped the Commission would renew its clearance, arguing that the situation had not dramatically changed since it got its original exemption. Mr Reilly also stressed that any block-booking allegations in Europe had been found to be groundless, including by the Commission itself.

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Publication:European Report
Geographic Code:4E
Date:Feb 13, 1999
Words:390
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