Cineworld Group may have to sell cinemas after the Competition Commission said that its acquisition of Picturehouse would lead to higher prices for customers in three areas.
In its preliminary findings on Cineworld’s $76m (£47.3m) acquisition of boutique cinema chain Picturehouse, the CC said that Cineworld may have to sell three cinemas in Aberdeen, Bury St Edmunds and Cambridge, where “the acquisition could lead to a substantial lessening of competition”.
CC deputy chairman Alasdair Smith said: “We found that when setting the price of tickets, exhibitors take account of the prices of competing cinemas operating in their local area. We will now look at ways we can restore competition and protect customers’ interests.”
While Cineworld operates mainly large out-of-town-centre cinemas, Picturehouse’s cinemas tend to be smaller cinemas located in city centres.
The CC have cleared plans to open new Picturehouse’s in London’s Crouch End and Chiswick so the cinema chain’s expansion plans remain in focus.
Commenting on the announcement, Cineworld CEO Stephen Wiener said: “We are disappointed that in these three locations we have been unable to convince the Competition Commission that Cineworld and Picturehouse are two fundamentally different businesses that could operate in the same area.
“Nevertheless the combination of the two businesses will remain strategically compelling, as our recent results showed clearly, and we are committed to continuing the expansion and investment into both.”
Cineworld, the biggest operator by market share, has 79 cinemas in the UK, while Picturehouse has 21.
In a statement on its Facebook page, Picturehouse said: “We’re clearly disappointed by this news as we had hoped to persuade them that the Picturehouse and Cineworld experiences are different and give genuine choice to customers but they have concluded that the acquisition “would lead to higher prices for customers” in these areas.
“The Competition Commission have suggested the sale of either a Cineworld cinema or a Picturehouse cinema may be required in these areas. The next stage of the process is to meet with the Competition Commission to discuss the possibility of other remedies that avoid sales.”
The CC’s findings are provisional at this stage and Cineworld now has an opportunity to respond before the Commission publishes its final report, which it must do by Oct 14, 2013.