DOJ Reviewing Anti Trust Rule That Prevented Major Film Studios from Owning Cinemas

Updated 14 weeks ago Edited from a Press Release

As part of The Department of Justice’s review of nearly 1,300 legacy antitrust judgments, the Antitrust Division today announced that it has opened a review of the Paramount Consent Decrees, which for over seventy years have regulated how certain movie studios distribute films to movie theatres.  The purpose of the review is to determine whether or not the decrees should be terminated or modified.

 

The Antitrust Division announced in April its initiative to terminate legacy antitrust judgments, stating that it would review all such judgments to identify those that no longer serve to protect competition.  The initiative was undertaken because many of the final judgements that the Division entered into from the earliest days of the Sherman Act until the late 1970s do not include sunset provisions or express termination dates.  Consequently, those judgements are perpetual, regardless of whether there have been subsequent industry or technological changes that might make those judgements either ineffective in protecting competition or even anticompetitive themselves.  

In particular, the Paramount Decrees have regulated how certain movie studios distribute films to movie theatres since the Supreme Court’s decision in United States v. Paramount, 334 U.S. 131 (1948).  

For example, the decrees ban various motion picture distribution practices, including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theatres in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting overbroad clearances (exclusive film licenses for specific geographic areas).  

Given that these decrees do not have any sunset provisions or termination dates, the Division will thoroughly review them to determine whether they still serve the American public and are still effective in protecting competition in the motion picture industry.  

“The Paramount Decrees have been on the books with no sunset provisions since 1949.  Much has changed in the motion picture industry since that time,” said Makan Delrahim, Assistant Attorney General for the Justice Department’s Antitrust Division.  “It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition.  Today, we take an important step forward in the process of reviewing the Paramount Decrees.”   

Since the district court entered the Paramount Decrees, the motion picture industry has undergone considerable change.  None of the Paramount defendants own a significant number of movie theatres.  Additionally, unlike seventy years ago, most metropolitan areas today have more than one movie theatre.  The first-run movie palaces of the 1930s and 40s that had one screen and showed one movie at a time, today have been replaced by multiplex theatres that have multiple screens showing movies from many different distributors at the same time.  

 

Finally, consumers today are no longer limited to watching motion pictures in theatres.  New technology has created many different distribution and viewing platforms that did not exist when the decrees were entered into.  After an initial theatre run, today’s consumers can view motion pictures on cable and broadcast television, DVDs, and over the Internet through streaming services.  

As a consequence of all of these changes, and the fact that the decrees have been in place for over seventy years, the Department has opened a review to determine whether the decrees should be modified or terminated.

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