Cineplex Must Sell Screens To Buy Famous Players

The Competition Bureau filed a consent agreement today with the Competition Tribunal to resolve competition concerns arising from Cineplex Galaxy's acquisition of Famous Players.

"Our goal is to ensure that consumers continue to benefit from competitive prices and choice in the exhibition of first run motion pictures," said Gaston Jorré, Senior Deputy Commissioner of Competition. "The agreement requires the sale of 35 theatres with 284 screens in 17 cities in six provinces with box office revenues of about $100 million."

The Bureau examined the full competitive impact of the merger in each local market where the parties were in competition. It considered consumer alternatives such as DVDs, Pay-Per-View and Video on Demand, but concluded that the exhibition of first run motion pictures continues to be a distinct product market. The Bureau also concluded that there are barriers to entry into the industry that include the need to find suitable locations, the costs associated with a specialized building and access to commercially valuable motion pictures.

As a result of the Bureau's competition concerns, Cineplex has agreed to sell theatres in Victoria, Vancouver, Calgary, Edmonton, Lethbridge, Saskatoon, Winnipeg, London, St. Catharines, Kitchener, Hamilton, Kingston, Ottawa, Toronto, Gatineau, Montreal and Quebec City.

"Given the degree of concentration in the industry and the barriers to entry into the market, it is essential that these theatres be sold off to ensure that this merger does not result in a substantial prevention or lessening of competition," Mr. Jorré added.

The consent agreement provides that if Cineplex Galaxy is unable to sell the theatres, a trustee will be appointed to complete the sale process. An independent manager will be appointed to oversee pricing and film booking for the theatres to be divested during the sale period.

The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.