Cineworld to sell some cinemas after competition inquiry

20th Aug 2013 08:36

A competition inquiry has ruled that Cineworld's December acquisition of rival City Screen would lead to a reduction in competition in some cities but could be resolved by selling cinemas. The Competition Commission, which replaced the Monopolies and Mergers Commission, stated that Cineworld could sell cinemas in order to eliminate monopolistic conditions that would arise in Aberdeen, Cambridge and Bury St Edmunds as a result of the acquisition. In response, Cineworld Chief Executive Officer 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."Cineworld noted that the Commission's findings were provisional at this stage and the company has an opportunity to respond before a final decision is made in October.To add to its 79 UK cinemas, Cineworld bought City Screen, which operates 21 cinemas predominantly under the Picturehouse brand. The Commission's Deputy Chairman, Alasdair Smith, explained: "We found that when setting the price of tickets, exhibitors take account of the prices of competing cinemas operating in their local area. "We focused our detailed analysis on nine of the areas where Cineworld and City Screen/Picturehouse compete, looking at the extent to which they compete with each other and with other cinemas."The Commission said that while Cineworld operates mainly large out-of-town-centre cinemas, Picturehouse's cinemas tend to be smaller cinemas located in city centres, and would only create a monopolistic situation in those three locations and likely lead to higher prices for local cinemagoers. Wiener argued that the combination of the two businesses remained "strategically compelling" despite the ruling and stressed that it was committed to continuing its expansion and investment into both businesses.Shares in Cineworld were down 2.3% to 395p at 09:41 on Tuesday.OH