United Intl. Pictures, the foreign distribution arm of Paramount, Universal and MGM/UA, has reacted furiously to Tuesday’s call by European audiovisual commissioner Joao de Deus Pinheiro for the breakup of the joint venture (Daily Variety, Feb. 23).

UIP claims that Pinheiro’s comments were based on a serious misunderstanding of UIP’s position in the European market and contained several major inaccuracies.

Pinheiro reportedly said that UIP has an 80% share of the European theatrical market. According to UIP, the true figure for the past four years ranges between 15% and 20%.

“These remarks betray an appalling ignorance both of the marketplace and of UIP’s specific situation,” said Brian Reilly, UIP’s senior VP and general counsel.

“This intervention by Pinheiro is practically unprecedented in the history of the European Commission, and suggests that UIP is being unfairly singled out for political reasons,” he said.

In 1989, the commission granted UIP an exemption from European rules governing anti-competitive joint ventures. The commission’s competition division is currently deciding whether to renew this waiver.

There is strong political lobbying from local film producers for the waiver to be canceled. For many within the European film industry, UIP has become the most visible symbol of Hollywood’s hegemony over European cinemas.

Pinheiro, who heads the commission’s audiovisual division, responsible for film and TV policy, has no direct role in this investigation. However, he heads a fundamental review of E.U. policy on the audiovisual industry, including the question of quotas and subsidies. That review will lead to a Green Paper later this year.

Reilly rejected Pinheiro’s claim that UIP has not even applied for its waiver to be renewed. In fact, UIP made this application publicly in June last year.

Reilly also described Pinheiro’s assertion that “nobody can explain why (the exemption) was granted” in the first place as “an astonishing statement,” pointing to the detailed explanation published by the commission in 1989.

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