AMC Entertainment discloses government antitrust probes

AMC Entertainment discloses it's under investigation by the U.S. Justice Department's antitrust division

AMC Entertainment Inc., the nation's second largest theater chain, disclosed in a regulatory filing that the U.S. Department of Justice was investigating its business practices.

The Leawood, Kan.-based company, owned by China's Dalian Wanda Group, said it received a request known as a civil investigative demand on May 28 from the antitrust division of the Justice Department in connection with an investigation into alleged violations of the Sherman Antitrust Act. 

AMC also disclosed that it received a similar request from Ohio attorney general's office.

As the Los Angeles Times recently reported, federal agents have been investigating allegations from independent theater owners that AMC and other circuits have used their market clout to block smaller rivals from receiving first-run movies at the same time the big chains do.

The department has already interviewed several theater owners across the country and requested detailed records from AMC and two other top chains, Regal and Cinemark.

The department has assembled a task force of attorneys and economists to examine a business practice known as clearances, licensing agreements in which theaters obtain permission from studios to exclusively show first-run movies in their theaters within certain zones, thereby blocking nearby rivals from playing the same movie at the same time.

"The CIDs [civil investigative demands] request the production of documents and answers to interrogatories concerning potentially anticompetitive conduct, including film clearances and participation in certain joint ventures," AMC said in its filing with the Securities and Exchange Commission on Monday.

AMC executives have maintained that their use of clearances is legal and consistent with longstanding industry practice.

"We do not believe the company has violated federal or state antitrust laws and are cooperating with the relevant governmental authorities," the company state in its filing. "However, we cannot predict the ultimate scope, duration or outcome of these investigations."

The investigation is being closely watched in the exhibition industry and in Hollywood because it could force changes in how major motion pictures are distributed and lead to costly fines for the big chains.

Twitter: @rverrier

Copyright © 2016, Los Angeles Times
58°