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According to the report, the Competition Council initiated the investigation after receiving information from the company Multikino Lietuva. He stated that he had received an offer from the film distributor Theatrical Film Distribution to sign a film screening contract identical to the one that Multikino Lietuva had already concluded with another film distributor NCG Distribution. The two contracts coincided with the procedure for calculating distribution prices for films, known as rentals, and their specific amounts.
In the course of the investigation, the Competition Council found that Theatrical Film Distribution had obtained the employee contract from two companies belonging to the same group of companies, Forum Cinemas and NCG Distribution. In this way, the competitor’s disclosure procedure and the rental price amounts of another film distributor, NCG Distribution, were disclosed. The Competition Council states that correspondence between employees confirms that the companies agreed to apply uniform prices when distributing the films.
The Competition Council concluded that Theatrical Film Distribution was the first to award the contract to Forum Cinemas, which encouraged and lobbied for the contract’s distribution pricing scheme to be applied to cinemas, including Multikino. In this way, Forum Cinemas sought to limit the application of lower prices (promotions, discounts) to cinema tickets, since theaters would have to reimburse discounts on their revenue share by reducing the price of tickets. This purpose of the agreement is also reflected in the correspondence of the companies, where the actions are called “theft” of banknotes:
Theatrical Movie Distribution: “Promotions that lower our rents are wrong. It is not normal that so many actions are 4d / week. It would be great to have a medium rental, out of stock, which would help the business survive and increase revenue. “
Forum Cinemas: “The 2-in-1 robberies were committed solely by Multikino, other cinemas were not.”
Following the opening of an investigation by the Competition Council, Theatrical Film Distribution did not continue negotiations with the cinemas on prices agreed upon during the line-up and the impact of Forum Cinemas on cinema fees was not felt.
“This is not the first time that the Competition Council has established an agreement on prices in the cinema market, where companies with a significant stake pursue the same objective in various ways: to restrict competition and keep ticket prices at a low price. We have avoided actions of this type that would have harmed consumers by initiating an investigation, “commented Šarūnas Keserauskas, Chairman of the Competition Council.
After assessing the seriousness, duration and other circumstances of the infringement, the Competition Council calculated the following fines for companies: Distribution of theater films: EUR 167,690; NCG distribution: 132,810 EUR; Cines Forum – 3,537,590 Eur. However, given the exceptional consequences of the COVID-19 pandemic for the cinema sector, the level of financial sanctions has been reduced by 80%. and the following fines were imposed: Distribution of theatrical films: 33,500 euros; NCG distribution: 26,600 euros; Forum Cinemas – 707,500 Eur.
Forum Cinemas disagrees with the study’s findings
In a statement to the media, Forum Cinemas states that it is disappointed with the decision of the Competition Council and does not agree with its conclusions.
Forum Cinemas values compliance with the Competition Law in a very responsible manner in its activities. Communication between the company and the film distributor mentioned in resolution CC is, in our opinion, normal legal business conduct, encouraging the introduction of a more transparent film rental model on the market, which has already been reviewed and approved. by the CC itself.
Therefore, the inclusion of Forum Cinemas in this antitrust case is, in our opinion, unjustified and unfair. Furthermore, it is surprising that the CC imposed a particularly severe financial penalty in the context of a pandemic, which the Lithuanian and global film industry suffered particularly severely. We will analyze this decision and decide on possible additional steps, including the possibility of appealing to the court, “the company said in a statement.
The decision of the Competition Council can be appealed to a court within one month of its publication on the institution’s website.
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