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Press releases 2005
OFT accepts undertakings instead of referring cinema merger to the Competition Commission
112/05 21 June 2005
The OFT has decided today to accept the undertakings offered by Blackstone LR Associates (Cayman) IV Ltd (and UK subsidiary, Cineworld UK Limited) in relation to its acquisition of the UGC cinema chain. The OFT has decided that the undertakings offered address the competition concerns in relation to the supply of cinema exhibition arising from Blackstone's acquisition of UGC Cinemas Holdings Limited. This transaction will not now be referred to the Competition Commission.
The Blackstone Group acquired the Cineworld cinema chain in October 2004. In lieu of reference to the Competition Commission of its acquisition of the UGC chain, Blackstone has offered to make divestments in relation to six local areas (see note 1). The OFT considers that the proposed undertakings will clearly address the competition concerns identified in these areas in its decision of 28 April 2005 (see OFT press release 78/05).
NOTES
1. The six areas where divestments are required are Boldon, Harlow, Swindon, Wigan, Birmingham and 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 the OFT shall give notice of the proposed undertakings under Schedule 10 of the Enterprise Act 2002, and considered any representations made in accordance with that notice.
6. The text of the decision will be placed on the mergers section section of the OFT website as soon as is reasonably practicable.
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