EU to renew 5-year UIP exemption

FERA maintains distrib is squeezing European movies out of market

BRUSSELS — Despite the protests of the Federation of European Film Directors (FERA), the European Commission is set to renew the five-year exemption from antitrust rules enjoyed by United International Pictures, the movie distribution joint venture between Paramount, Universal and MGM.

A commission spokesman confirmed to Daily Variety that Karel van Miert, the outgoing competition commissioner, would make a final judgment before Sept. 20, when the Belgian leaves and Mario Monti, the current tax commissioner, takes over the job.

The reports confirm the commission’s preliminary judgment made in July, when the EU executive called on any third parties interested in the case to let their objections be known.

Earlier this week FERA wrote to incoming commission president Romano Prodi, insisting that UIP acts like a distribution cartel in the movie market.

FERA maintains that UIP is squeezing European movies out of the market.

However, competition officials have dismissed FERA’s arguments, and van Miert has claimed that FERA’s case had been badly made.

A surprise result

Sources in Brussels have expressed some surprise at the long and winding course that the UIP case has taken. It has been noted that the original five-year exemption ran out in 1993 and that there has been no concrete legal basis for UIP’s continued operations since then.

In addition, the competition supremo had originally raised serious doubts about UIP.

However, UIP has since made changes to the agreements with its studio backers, and has pledged not to engage in block-booking, the practice of requiring exhibitors to show less-popular films in order to get big hits. UIP denies ever block-booking.

The UIP backers have also agreed to dump clauses obliging UIP to maximize revenue for each movie it distributes.

The commission says that if the provision remains, it would be hard for UIP to avoid anti-competitive practices.

UIP has also agreed to stoke its backing for European movie production and distribution. UIP said it has invested more than $1 billion in Europe since 1989.

FERA has mocked UIP’s investment claims in Europe.

Heavy lobbying suggested

Most sources suggest that there must have been some fairly heavy lobbying by the UIP parties. Van Miert has exercised a notoriously tough line on any hint of anti-competitive practices in the EU and the continued exemption set to be enjoyed by UIP is surprising.

UIP’s market share in the EU has averaged 20% since it entered the market in 1989, but dropped to 13% in 1997. Universal owner Seagram’s purchase of Polygram has not noticeably helped UIP to increase its market share.