The U.S. Department of Justice (DOJ) recently initiated an investigation into the potential anti-competitive practices by three large movie theater chains of the nation. The movie theater chains under investigation are AMC Entertainment Holdings Inc. AMC, Regal Entertainment Group RGC and Cinemark Holdings Inc. CNK. Together, these three companies command around a 40-42% share of the total U.S. movie theater market.
The primary concern for small theater groups and the DOJ is the abuse of film clearances by the large movie theater chains. Film Clearance is an agreement between the movie theater chains and movie studios to secure exclusive rights to screen certain movies, especially blockbusters, in specific markets.
The movie studios often succumb to pressures from large movie chains and grant them clearance in order to raise their ticket sales. Otherwise these large theater operators may not screen the movies released from those studios.
All these procedures ultimately affect small independent movie theaters which get barred from screening box-office hit movies for weeks after their premiere. This situation has significantly affected the businesses of the small and independent movie theaters. Yet all the three movie theater behemoths denied that they are resorting to unfair measures in order to exploit their monopolistic powers and have agreed to cooperate with the DOJ investigation process.
The theater majors have argued that clearances from movie studios are needed only for some select movies to gain the upper hand over other larger theaters chains. Clearances are not used to prevent small chains to enter into the field. However, the small theater chains have alleged that their larger counterparts are actually blocking distribution rights to new releases which sometime compel them to close down operations.
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