On 31 May 2017, the Belgian Competition Authority (Belgische Mededingingsautoriteit / Autorité belge de la Concurrence) (“BCA”) announced its decision to lift partially the remedies imposed on cinema group Kinepolis in 1997 and amended in 2010.
This decision constitutes the latest development in a legal saga concerning the cinema sector in Belgium. In 1997, the former Belgian Competition Council (which was the competition authority replaced by the BCA in 2013) cleared the concentration between the Bert and Claeys groups giving rise to Kinepolis group. This was, however, subject to a set of behavioural remedies, such as the prohibition on Kinepolis to negotiate exclusive rights for the screening of films or the obligation on Kinepolis to obtain the Competition Council’s prior approval before any planned increase of the number of its screens or seats. Kinepolis asked the Competition Council to lift these conditions in 2006. The Competition Council acceded to Kinepolis’ request in a decision adopted on 16 April 2007, noting changes in the market environment (See, VBB on Belgian Business Law, Volume 2007, No. 4, p. 3, available at www.vbb.com ). However, this decision was successfully appealed by the Belgian Federation of Cinemas and competing cinema groups UGC and Utopolis. In a judgment of 18 March 2008, the Brussels Court of Appeal (Hof van beroep te Brussel / Cour d’appel de Bruxelles) found that the Competition Council had not shown in its decision that market conditions sufficiently changed to make the 1997 conditions redundant (See, VBB on Belgian Business Law, Volume 2008, No. 3, pp. 2-3, available at www.vbb.com ).
The case was sent back to the Competition Council, which, in a 1 October 2008 decision, partially upheld the 1997 conditions (See, VBB on Belgian Business Law, Volume 2008, No. 10, pp. 2-3, available at www.vbb.com ). However, the Belgian Federation of Cinemas as well as UGC and Utopolis cinema groups again appealed the decision. In the 11 March 2010 judgment, the Court of Appeal partially annulled the 2008 decision, considering that the market circumstances had not materially changed between the Competition Council’s decisions of 16 April 2007 and 1 October 2008 in order to justify lifting the conditions imposed on Kinepolis (with the exception of the condition requiring Kinepolis to obtain prior approval before increasing the number of screens or seats in existing cinemas by more than 20%, which the Court lifted). Following this judgment, Kinepolis could request the annulment of the remaining conditions after three years. In the absence of such a request, the conditions would automatically be prolonged for additional three-year terms (See, VBB on Belgian Business Law, Volume 2010, No. 4, p. 3, available at www.vbb.com ).
On 31 March 2017, Kinepolis requested the BCA to lift the remaining conditions imposed on it. The BCA analysed whether each of the conditions was still necessary to counter a restriction of competition in the current market structure. The BCA concluded that the condition imposed on Kinepolis to obtain prior approval for expanding organically should be lifted. The other remedies (which: (i) prevent Kinepolis from obtaining exclusive or priority rights to distribute films; (ii) prohibit any acquisition of cinema complexes by Kinepolis without the BCA’s prior approval; and (iii) include programming agreements with independent cinema owners) remain in force.
The decision to lift the prior approval on Kinepolis’ organic growth will take effect as of 31 May 2019. The BCA explained that the two-year interim period between the adoption of this decision and its entry into force should make it possible to remedy any adverse effects on the market which this decision may have. It will further allow Kinepolis’ competitors to plan profitable investments in markets which are not yet saturated.
