CINE.L Regulatory News (CINE)

News Release

44/13 20 August 2013

Cineworld could have to sell cinemas

Cineworld Group plc (Cineworld) could have to sell cinemas in three areas after the Competition Commission (CC) provisionally concluded that its completed acquisition of City Screen Limited, which runs the Picturehouse chain, would lead to higher prices for customers in Aberdeen, Bury St Edmunds and Cambridge.

Cineworld, which operates 79 cinemas in the UK, bought City Screen Limited, which operates 21 cinemas, predominantly under the Picturehouse brand, in December 2012. While Cineworld operates mainly large out-of-town-centre cinemas, Picturehouse's cinemas tend to be smaller cinemas located in city centres.

In the provisional findings of its inquiry into Cineworld's acquisition of City Screen Limited, a summary of which is published today, the CC has provisionally concluded that the acquisition could lead to a substantial lessening of competition in the three areas-Aberdeen, Bury St Edmunds and Cambridge-where Cineworld and Picturehouse face limited competition.

As well as the provisional findings, the CC has published a Notice of possible remedies detailing measures which could address the loss of competition in the three areas, such as selling cinemas to a competing owner.

Alasdair Smith, CC Deputy Chairman and Chairman of the Cineworld/City Screen merger Inquiry Group, commented:

'We found that when setting the price of tickets, exhibitors take account of the prices of competing cinemas operating in their local area.

'We focused our detailed analysis on nine of the areas where Cineworld and City Screen/ Picturehouse compete, looking at the extent to which they compete with each other and with other cinemas. We found that there were three areas-Aberdeen, Bury St Edmunds and Cambridge-where they were in direct competition with each other, and faced limited competition from other cinemas so that the reduction of local competition could lead to higher prices for local cinemagoers. We will now look at ways we can restore competition and protect customers' interests.'

The CC will consider responses to the provisional findings and notice of possible remedies before publishing its final report, which it must do by 14 October 2013.

A summary of the provisional findings is available on the inquiry home page along with other information relating to the inquiry. The full provisional findings report will be published shortly.

Any interested party is invited to respond to the provisional findings, in writing, by no later than Tuesday 10 September 2013. To submit evidence, please email: CineworldCityScreen@cc.gsi.gov.uk or write to:

Inquiry Manager

Cineworld/City Screen merger

Competition Commission

Victoria House

Southampton Row

LONDON

WC1B 4AD

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.

2. The Enterprise Act 2002 empowers the Office of Fair Trading to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

3. The members of the Inquiry Group are: Alasdair Smith (Chairman of the Group), Rosalind Hedley-Miller, Jon Stern and John Wotton.

4. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

5. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.

6. Enquiries should be directed to Rory Taylor or Siobhan Allen or by telephoning 020 7271 0242.