OFT considers undertakings instead of reference to the competition commission of cinema merger

3/05 7 January 2005

The OFT has decided today not to refer the acquisition by Terra Firma investments (GP) 2 Ltd of United Cinemas International (UK) Limited and Cinema International Corporation (UK) Limited to the Competition Commission provided that satisfactory divestment undertakings are given to address competition concerns identified in relation to the supply of cinema exhibition in 11 local areas across the UK (see note 1). If the parties do not give such undertakings, then the transaction will be referred.

The merger follows Terra Firma's acquisition of the Odeon cinema chain, which was cleared by the OFT on 23 November 2004.

Sir John Vickers, OFT Chairman, said:

'This merger may lessen competition, to the detriment of cinema-goers, in a number of areas across the country where both UCI and Odeon operate. We have identified eleven local areas where there are competition concerns, and the parties have offered to divest cinemas to remove those concerns. We are therefore considering whether to accept divestment undertakings in lieu of reference to the Competition Commission.'

NOTES

1. The 11 local areas where competition concerns have been identified in relation to the supply of cinema exhibition are: Clydebank, Newcastle Gateshead/Silverlinks, Poole, Sutton, Tamworth, High Wycombe, Dudley, Hatfield, Surrey Quays/Greenwich, Basildon and Leicester Square.

2. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

4. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

5. Before accepting any such undertakings under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice.

6. The text of these decisions will be placed on the mergers section of the website.

Back to: Press releases

Navigate the OFT website:

News and updates

What was new in...

Feedback

Press releases 2005 -