BRUSSELS, Belgium (AP) — The European Community Commission said Friday it will examine under fair competition rules the United Cinemas Intl. Multiplex joint venture between Paramount Communications and MCA Intl.
Under EC competition law, the commission examines linkups that could create dominant positions or distort competition. It can alter a greements that threaten EC competition.
UCI Multiplex operates cinemas in Germany, Spain, Ireland and Britain through its subsidiaries. Its primary aim is to operate cinema complexes that include about eight screens, restaurants and car parks.
Paramount and MCA each own 49.02% of the capital of UCI Multiplex, with the 1 .96% balance held by Stichting Cinema Intl. Corp. Charitable Trust Fund. Parent companies Paramount Pictures and MCA are guarantors for the project.
Although Paramount and MCA are involved in the film industry, neither has any exhib involvement in the 12-nation trade bloc, except for one cinema in Paris.
Under the terms of the agreement, Paramount and MCA agree not to acquire or operate a cinema in any country in which UCI Multiplex or its subsidiaries operate. However, they may acquire holdings for investment purposes and keep interests already owned on July 1, 1990, when the agreement was made.
If either party wants to withdraw from the joint venture, it must first offer to sell its shares to UCI Multiplex or to the other main partner.
Although they are potential competitors, MCA and Paramount say the joint venture is justified because of the high cost of constructing the multiplex centers.
The companies also say that the decline in cinema attendance since the early 1960s is due to a lack of investment by distributors with substantial market shares, who face little or no competition.
The joint venture will have to compete with other exhibitors on national markets to win exhibition rights, audiences and advertising.
However, it hasn’t provided clear information about its existing market share , the commission said in the EC’s official journal.