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IPic sues AMC and Regal over business dispute

IPic sues AMC and Regal over business dispute
Patrons relax during a screening at an iPic (formerly Gold Class Cinemas) theater in Pasadena. (Lawrence K. Ho)

The legal skirmish between small movie theaters chains and larger exhibitors over alleged anti-competitive practices shows no signs of abating.

On Tuesday, IPic-Gold Class Entertainment sued Regal Entertainment and AMC Entertainment in a Texas district court, alleging the nation's two largest theater chains were using their "market power" to "squeeze out" iPic's new theater in Houston and one planned in the Dallas area.

IPic alleges that in July 2014 Regal and AMC told studios that any film they licensed to the IPic theaters in Texas would not play at nearby theaters operated by the larger chains.

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"They have threatened film studios with an illegal boycott: studios must license top first-run films to defendants, but not to IPic," the lawsuit states.

In today's world every theater needs all the product it can get.


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As a result, IPic alleges, the new Houston theater has been unable to get licenses to screen such first-run movies as "The Martian," "Bridge of Spies" and "Steve Jobs," threatening its its viability as a business.  The planned theater in the Dallas area faces a similar obstacle, IPic states.

"It's a predatory action," said Hamid Hashemi, chief executive of IPic, a Boca Raton, Fla., company that operates 12 luxury theaters in Florida, California and several other states. "In today's world every theater needs all the product it can get."

The lawsuit centers on an industry practice known as clearances, which are license 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 courts have allowed limited use of clearances in cases in which theaters are in substantial competition with one another.

But IPic maintains that its theaters do not compete with the AMC and Regal theaters because they are smaller, sell higher-priced tickets and offer premium services such as luxury dining and beverage services. IPic is seeking an injunction to remove the clearances on its theaters.

In a statement, AMC defended its actions.

"Allocated film zones are a long-standing, well-established industry practice," a spokesman for AMC said. They have "demonstrated benefit to all stakeholders – moviegoers, studios and exhibitors."

A spokesman for Regal could not be reached.

The lawsuit is the latest of several cases filed by independent and regional theater chains over alleged anti-competitive business practices by larger circuits.

Last year, Cobb Theatres sued AMC in U.S. District Court in Georgia. Cobb, which operates 20 theaters, accused AMC of using its "monopoly power" to block some first-run movies from being screened at an upscale cinema and dining complex in Brookhaven, a suburb of Atlanta. The suit alleges that AMC persuaded studios to give two nearby AMC theaters in Buckhead preferential treatment.

AMC denied the allegations and moved to dismiss the case. A federal judge in March allowed it to proceed.

The complaints from IPic and others have prompted a wide-ranging probe by the Department of Justice, which this summer ordered Regal Entertainment Group, AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. to supply documents as part of a widening investigation into whether the largest theater chains violated federal antitrust laws. The government also has assembled a task force of attorneys and economists to examine the issue.

Twitter: @rverrier

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