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New owners will run one of the cinemas Cineworld currently owns in each of Aberdeen, Bury St Edmunds and Cambridge after the Competition Commission (CC) decided that its acquisition of City Screen Limited, which runs the Picturehouse chain, could mean higher prices for customers in these areas.

Cineworld, which operates 78 cinemas in the UK, bought City Screen, which operates 21 cinemas mostly under the Picturehouse brand, in December 2012. While Cineworld mainly operates large out-of-town cinemas, Picturehouse’s cinemas tend to be small cinemas located in city centres.

In its final report published today, the CC has concluded that the acquisition could lead to a substantial lessening of competition in the three areas—Aberdeen, Bury St Edmunds and Cambridge—where Cineworld and Picturehouse face limited competition, and that this could lead to higher prices for local cinema goers. This confirms the CC’s provisional findings which were published in August.

Cineworld will now be required to sell one of the cinemas it owns in each of these areas (it can choose which) to an operator approved by the CC, who will not only be expected to continue running it as a cinema but will also need to demonstrate that they have the appropriate expertise and experience to do so.

Alasdair Smith, CC Deputy Chairman and Chairman of the Cineworld/City Screen merger Inquiry Group, commented:

‘Before we reached our final decision, we listened carefully to the many local filmgoers who wrote to us or signed a petition, expressing concern about a potential sale of Picturehouse cinemas, particularly in Bury St Edmunds and Cambridge. However, we are not doing anything that we think will jeopardize the future of any of the cinemas in question.

‘We still believe that Cineworld and Picturehouse are in direct competition with each other. There is a considerable overlap between audiences and screenings at the two cinema groups. For example, both in Bury St Edmunds and Cambridge, about one-third of Picturehouse customers have been to Cineworld in the last 12 months and Picturehouse gets over half its revenue from films also shown at Cineworld.
 
‘The sale of one of the cinemas in Aberdeen, Bury St Edmunds and Cambridge to a competing cinema operator will restore competition in these areas and protect customers’ interests.

‘Cineworld will have the choice of selling any one of the cinemas it owns in the three areas. If it chooses to sell any of the Picturehouse cinemas, we are confident that a new owner will wish to build on their existing strengths.’

The final report and all other information relating to the investigation are available on the inquiry home page.

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.

2. The Enterprise Act 2002 empowers the Office of Fair Trading to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

3. The members of the Inquiry Group are: Alasdair Smith (Chairman of the Group), Rosalind Hedley-Miller, Jon Stern and John Wotton.

4. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

5. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.

6. Enquiries should be directed to Rory Taylor or Siobhan Allen or by telephoning 020 7271 0242.