Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AMC theatre chain alleged to have limited competitor’s access to top movies, (Jan 24, 2014)

By Linda O’Brien, J.D., LL.M.

A major film theatre operator has engaged in anticompetitive conduct by coercing film distributors to limit a competing cinema operator’s access to top-grossing movies and by coercing lessors not to lease theatre space to competitors, according to a complaint filed in the federal district court of Atlanta (Cobb Theatres III, LLC v. AMC Entertainment Holdings, Inc., January 22, 2014).

Cobb Theatres owns and operates integrated cinema and dining venues located in Georgia, Florida, Virginia, and Colorado. AMC Entertainment owns and operates theatres worldwide, and is the second-largest theatre circuit in the United States.

Cobb and AMC are the only film theatre operators in the Buckhead and Brookhaven districts (zone) of Atlanta, according to the complaint. Measuring by the percentage of theatre seats owned or controlled, AMC controls 69% of the market for film licenses in that zone. Due to its high market share and the high barriers to entry into the market, AMC has monopoly power to force film distributors to exclude Cobb from the market, the plaintiff claimed.

The complaint alleges that, in fall 2010, an AMC executive sent a letter to major film distributors that operated as a de facto demand by AMC for preferential treatment or exclusive film licensing treatment over Cobb. Several distributors honored AMC’s demand by allocating substantially more high-grossing newly released films to AMC. AMC’s demand for preferential and exclusive treatment allegedly has reduced Cobb’s fair competitive access to such films, denied Cobb needed revenue to stay in business, limited theatre choices for moviegoers, and damaged Cobb’s relationships with distributors.

AMC has also coerced lessors of theatre space with threats that a new theatre entrant would have a difficult time licensing films due to AMC’s receipt of preferential treatment from film distributors, thereby making a lease to an AMC competitor less lucrative for the lessor, the plaintiff charged. As a result of the threats, the lessors were deterred from leasing their spaces to Cobb in several locations that would compete with AMC, according to the complaint.

Cobb Theatres asserts claims of contracts in restraint of trade, monopolization, attempted monopolization, exclusive dealing, and tortious interference with business relations. The action seeks injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-00182-SCJ.

Attorneys: Henry D. Fellows, Jr. (Fellows Labriola LLP) and Thomas L. Boeder (Perkins Coie) for Cobb Theatres III, LLC and Cobb Theatres IV, LLC.

Companies: Cobb Theatres III, LLC; Cobb Theatres IV, LLC; AMC Entertainment Holdings, Inc.; AMC Entertainment Inc.; American Multi-Cinema, Inc.

News: Antitrust GeorgiaNews