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Press releases 2002 -

OFT accepts new film deal

PN 07/02    1 February 2002

Film-goers will benefit from freer competition between cinemas after changes to the terms on which film distributors make their films available to cinemas.

The Film Distributors' Association (formerly the Society of Film Distributors) has amended its standard conditions for commercial licences to show films in the UK, following the OFT's view that specific terms of the agreement infringed competition law. While the standard conditions were not compulsory for FDA members, in practice almost all films were licensed in accordance with them.

The following conditions were identified by the OFT as anti-competitive:

  • restrictions on the ability of cinemas and other film exhibitors to set their own admission prices
  • controls on the number of times and specific screens on which individual films can be shown
  • restrictions on exhibitors' use of complimentary tickets to promote films.

The OFT has concluded that the revised conditions – which come into effect from today – remove these restrictions and do not infringe competition law.

Download full text of the decision (pdf file 72 kb).

The FDA's members account for around 90% of UK cinema box office receipts, which totalled £621m in 2000, and two thirds of all films distributed in the UK.

Welcoming the changes, John Vickers, Director General of Fair Trading said:

'Competition law benefits consumers by prohibiting agreements that restrict and distort competition. Following these changes, film-goers will benefit from freer competition between cinemas.'

NOTES

1. On 15 August 2000, the Film Distributors' Association (FDA) notified its Standard Conditions for licensing the commercial exhibition of a film or films, dated 14 August 1997, to the Director for a decision under Section 14 of the Competition Act 1998. The FDA requested a decision that the Standard Conditions do not infringe the prohibition imposed by Section 2 of the Act (the 'Chapter I prohibition', see Note 2) or that, in the alternative, the Director grant the Standard Conditions an individual exemption under section 4 of the Act. The OFT identified a number of clauses that infringed the Chapter I prohibition. The FDA deleted or amended the relevant clauses and the revised conditions were approved by the FDA Council on 6 December 2001, following which the Public Register of Competition Act cases and the OFT website were updated on 20 December 2001. The Director General has today made a decision that the revised conditions do not infringe the Chapter I prohibition.

2. The 'Chapter I prohibition' of the Competition Act 1998 prohibits any agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade within the United Kingdom and have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom.

3. The Film Distributors' Association is a trade association currently representing the following 12 UK film distributors: Buena Vista International (UK) Ltd, Columbia Tristar Films (UK), 20th Century Fox Film Company Ltd, United International Pictures (UK), Warner Bros Distributors Ltd, Film Four Distributors Ltd, Feature Film Company, Icon Film Distributors Ltd, Momentum Pictures, Gala Film Distributors Ltd, Pathe Distribution Ltd and Entertainment Film Distributors Ltd.




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