Cineworld and City Screen ‘confident’ ahead of enquiry which will highlight five key sites.
The UK’s Office of Fair Trading today referred Cineworld’s acquisition of City Screen to the Competition Commission after “concerns the merger reduces competition and could restrict choice and increase prices for cinema-goers”.
The OFT identified that, in five local areas - Aberdeen, Brighton, Bury St. Edmunds, Cambridge and Southampton - the deal raises “a realistic prospect of a substantial lessening of competition”.
Jackie Holland, OFT senior director and decision maker in the case, said: “Our investigation found that, although Picturehouse cinemas show art-house and foreign language films, a large proportion of Picturehouse’s revenue comes from more mainstream films, in direct competition to Cineworld.
“We are concerned that, as a result of the merger, cinema-goers in five local areas could face higher ticket prices and a significantly reduced choice of cinemas and films”, she continued.
“The parties have not offered divestments to remove all of our concerns and we therefore believe the merger merits a full investigation by the Competition Commission.”
A statement on Cineworld’s website said: “We are not surprised by the decision because this is the first time a complex cinema acquisition of this type (ie. a multiplex cinema chain acquiring an independent cinema chain) has been made.
“Cineworld will be assisting the Competition Commission with its investigation as we believe the two businesses are fundamentally different.
“We run the two brands separately and we are confident that we will be able to demonstrate that local competition will not be reduced and, as 95% of respondents to a recent Picturehouse survey agreed, that “a multiplex experience is different to an arthouse cinema experience”.
The Competition Commission is expected to report by October 14.
Cineworld operates 80 multiplexes across the UK. City Screen, which trades under the Picturehouse brand, runs 21 cinemas in the UK.