Merger of Manchester cinemas may give rise to competition concerns
AMC’s acquisition of Odeon and UCI cinemas in Manchester may give rise to competition concerns.
The Competition and Markets Authority (CMA) has found that the merger may lead to the loss of choice for cinemagoers in Manchester. In particular, it has found that the AMC Great Northern and Odeon Printworks cinemas were close competitors and the merger risked leading to higher ticket prices or reduced quality or service for cinemagoers in Manchester.
AMC (UK) Acquisition Ltd (AMC) acquired Odeon and UCI Cinemas Holdings Ltd (Odeon) on 30 November 2016.
Prior to the merger AMC operated only one cinema in the UK, a 16-screen multiplex in Manchester (the AMC Great Northern). The CMA therefore only examined the impact of the merger on the supply of cinema exhibition services in Manchester. In this area, Odeon operated several cinemas, including the Odeon Printworks, a 20-screen multiplex.
AMC can avoid the merger being referred for an in-depth investigation if it can offer a remedy to address the competition concerns identified. The company has until 15 December 2016 to do so.
Sheldon Mills, CMA Senior Director of Mergers and decision-maker in this case, said:
It is important that we ensure that cinemagoers in Manchester are protected against increased ticket prices or reduced quality or service as a result of this merger. Only effective competition between cinema operators can provide that assurance. So we hope that AMC will address our competition concerns.
All information relating to this investigation can be found on the case page.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn and like our Facebook page. Sign up to our email alerts to receive updates on mergers cases.
- Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a merger reference, resulting in an in-depth phase 2 merger investigation, if the CMA believes that it is or may be the case that a ‘relevant merger situation’ has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and that 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.
- Under the Act a ‘relevant merger situation’ is created if 2 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 (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
- AMC (UK) Acquisition Ltd is a wholly owned subsidiary of AMC Entertainment Holdings, Inc, which is itself, a wholly owned subsidiary of the Dalian Wanda Group Co. Ltd.
- At AMC’s request, the European Commission referred the UK element of the merger to the CMA.
- The CMA considers that it is under a duty to make a phase 2 merger reference in this case under the Act. However, the duty to refer is not exercised while the CMA is considering whether to accept undertakings in lieu of a reference. AMC has until 15 December 2016 to offer undertakings that might be accepted by the CMA. If no undertaking is offered or accepted, then the CMA will by 22 December 2016 refer the merger for a phase 2 merger investigation.
- All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on merger investigations. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
- The text of this decision will be placed on the case page in due course.
- Media enquiries should be directed to Neil Kernohan (neil.kernohan@cma.gsi.gov.uk, 020 3738 6170).