Cinema-lovers may be facing an increase in ticket prices and less choice after cinema chain Cineworld bought its art-house peer Picturehouse, the Office of Fair Trading has warned.
The OFT has asked the Competition Commission to investigate concerns that the deal, which was completed last December, could result in a “substantial lessening of competition” in five local areas, including Aberdeen, Bury St Edmunds, Brighton, Cambridge and Southampton.
Jackie Holland, senior director at the OFT 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.”
Cineworld, which operates about 80 multiscreen cinema sites across the UK, bought City Screen’s Picturehouse for £47.3m.
Picturehouse, which has 21 cinemas across the UK including Bath and York, aims to attract an older, more cultured audience, than mass-market multiplexes.
Cineworld said in a statement that it was not surprised by the OFT’s decision to scrutinise the deal as this is the first time a cinema complex acquisition of this sort has been made.
Cineworld has pin pointed the art-house cinema sector as an opportunity to grow and has said that it plans to open a further 10 Picturehouse cinemas in locations throughout the UK.
Cineworld said: “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.”
Over 95 per cent of respondents to a recent Picturehouse survey said they agreed with the statement that “a multiplex experience is different to an art-house cinema experience”.
In a recent statement, Picturehouse said that it did not agree with the OFT’s conclusions: “We believe that all of the Picturehouse cinemas are important to the communities they serve and that they will thrive under the Cineworld wing.”
The UK’s cinema sector has been merging for years. Three players – Vue, UCI and Odeon, and Cineworld now regulate 70 per cent of the market between them.
The Competition Commission is likely to report its findings by 14 October 2013.
Over the last three years, the OFT has looked at more than 250 mergers and merger tenders, of which around 10 per cent were referred to the Competition Commission.
The Cineworld deal is the third merger in the media sector that has attracted the attention of competition watchdogs this year.
In January, the OFT said that it was examining a tie-up between leading regional newspaper publishers Trinity Mirror, Yattendon Group and DMGT.
In February, the Competition Commission said that it might force Global Radio to sell some of the local radio stations that it obtained last year from Guardian Media Group for an estimated £70m.
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