Hoyts, Greater Union and Village ('the Acquiring Exhibitors') propose to acquire Val Morgan and its associated entities.
The Commission conducted market enquiries and examined submissions from the parties and considered that it appeared that the proposed acquisition would have led to a substantial lessening of competition in the markets for cinema advertising and cinema exhibition in Australia, The main reason for the Commission's concern was that the acquisition would further vertically integrate the Acquiring Exhibitors, giving them effective control over an important revenue source for all cinema exhibitors. It was considered unlikely that actual or potential competition would constrain the Acquiring Exhibitors in this respect. The Commission therefore decided that the acquisition was likely to substantially reduce competition in breach of section 50.
The Acquiring Exhibitors offered an enforceable Undertaking to address the Commission's competition concerns. This Undertaking requires:
two of the Acquiring Exhibitors will divest their stake in Val Morgan within 18 months of the acquisition;
the Undertakings will remain in force until such time as the existing contracts between Val Morgan and the divesting exhibitors remain in force. Such contracts are, in any case, limited in the Undertakings to 12 months in duration;
Val Morgan honour existing contracts and will guarantee to offer new cinema advertising contracts to independent cinema exhibitors; and
Val Morgan will guarantee minimum contractual terms to be offered to independent cinema exhibitors.
The Undertaking also incorporates procedures and checks to ensure the independent exhibitors are dealt with fairly. The Commission considered that this Undertaking would address the competition concerns and decided not to oppose the acquisition.
