OFT considers undertakings instead of reference to the Competition Commission of cinema merger

78/05 28 April 2005

The OFT has decided today not to refer to the Competition Commission the completed acquisition by the Blackstone Group of UGC Cinemas Holdings Limited provided that satisfactory divestment undertakings to address competition concerns are given by the parties. If the parties do not give such undertakings, then the transaction will be referred.

The Blackstone Group acquired the Cine-UK cinema chain in October 2004. The OFT considers that its acquisition of UGC may lessen competition, to the detriment of cinema-goers in a number of areas across the country where both UGC and Cine-UK operate. Six local areas (see note 1) have been identified where there are competition concerns, and the parties have offered to divest cinemas in these areas to remove those concerns.

NOTES

1. Boldon, Harlow, Swindon, Wigan, Birmingham, Ealing/Slough.

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 a relevant merger situation has been created; and the creation of that situation has resulted, or 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 this decision can be found on the Mergers section of the website.

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