UIP to plead for its life at Euro Commission sesh

Competition watchdog to rule on possible antitrust violations

BRUSSELS (Reuters) — United Intl. Pictures this month will have a last chance to avoid an enforced breakup by trying to convince European antitrust regulators that it does not stifle competition.

The European Commission at the beginning of this year threatened to outlaw the joint venture between Metro-Goldwyn-Mayer Inc., Viacom Inc.’s Paramount Pictures and Universal Pictures; at the request of UIP, the EC has set a closed-door hearing for Sept. 25-26.

UIP said it hopes it will be allowed to continue under an exemption from normal European Union competition rules.

“We remain very confident that when the commission has an opportunity to fully review all of the evidence we presented and will present, that they will decide to grant a further extension (of the antitrust exemption),” UIP exec VP Brian Reilly told Reuters.

It is unclear when the EU’s competition watchdog will be making a final ruling, but it is likely to come only after it has completed an unrelated review of Seagram’s acquisition of Dutch-based Polygram NV and the subsequent sale of Polygram’s film division.

UIP was created in 1981 and received the EU’s blessing in 1989 on the grounds that an efficient distribution system could help a depressed European film market.

In January, the commission warned UIP in a letter it would most likely not renew its authorization, and EU competition chief Karel Van Miert said publicly he saw no valid reasons to allow the studios to continue grouping forces.

The European film industry, resentful of Hollywood’s dominance, has accused UIP of forcing film exhibitors to accept movie packages to be able to show big blockbuster productions. UIP has consistently denied this, and commission sources said this year they had found no evidence confirming the practice.

While UIP may not have acted illegally, the commission’s antitrust department seems to believe that the joint selling of U.S. films did not result in substantial enough benefits in Europe to offset its anti-competitive effects. UIP counters the three studios have invested more than $700 million in Europe.

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