The Australian Competition and Consumer Commission has backed increased competition amongst cinemas in Australia.
In a submission to a committee advising the Victorian Government on cinema-based entertainment facility developments, the ACCC says the current Australia cinema industry is dominated by Hoyts, Village and Greater Union. Village and Greater Union have extensive cross ownership links in both cinema exhibition and film distribution and are engaged in cinema joint ventures.
"The ACCC strongly supports the entry of a major new competitor into the industry," ACCC Chairman, Professor Allan Fels, said today. "This would benefit consumers by providing diversity of choice in price, service and quality."
Professor Fels said the competition between the major exhibitors was limited and concentration of ownership was high.
"Price competition between the major exhibitors has been limited," he said. "A inquiry by the former Prices Surveillance Authority concluded most of the price competition came from the small operators rather than the major national groups. The major exhibitors tend to charge the same prices and offer identical discounts for particular groups of customers and times of attendance.
"The ACCC is concerned that barriers to entry for new competition maybe inadvertently raised by State planning policy," Professor Fels said. "Therefore it has made this submission to the advisory committee which is specifically examining the proposed multiplex proposal in Melbourne by a US-based company, Reading. The recent price cut by major exhibitors needs to been seen in the context of the proposed entry by a new player. Price cutting to prevent or deter entry may provide short term benefit to consumers but, should it deter entry and allow prices to return to their original level, the benefit is short-lived.
"To increase competition, the ACCC would encourage the implementation of planning policies consistent with general competition principles.
"It is the ACCC's view that the planning guidelines should be not be able to be used as a legal mechanism by incumbent firms to prevent new firms from entering the market and providing customers with alternative methods of service provision."
In a submission to a committee advising the Victorian Government on cinema-based entertainment facility developments, the ACCC says the current Australia cinema industry is dominated by Hoyts, Village and Greater Union. Village and Greater Union have extensive cross ownership links in both cinema exhibition and film distribution and are engaged in cinema joint ventures.
"The ACCC strongly supports the entry of a major new competitor into the industry," ACCC Chairman, Professor Allan Fels, said today. "This would benefit consumers by providing diversity of choice in price, service and quality."
Professor Fels said the competition between the major exhibitors was limited and concentration of ownership was high.
"Price competition between the major exhibitors has been limited," he said. "A inquiry by the former Prices Surveillance Authority concluded most of the price competition came from the small operators rather than the major national groups. The major exhibitors tend to charge the same prices and offer identical discounts for particular groups of customers and times of attendance.
"The ACCC is concerned that barriers to entry for new competition maybe inadvertently raised by State planning policy," Professor Fels said. "Therefore it has made this submission to the advisory committee which is specifically examining the proposed multiplex proposal in Melbourne by a US-based company, Reading. The recent price cut by major exhibitors needs to been seen in the context of the proposed entry by a new player. Price cutting to prevent or deter entry may provide short term benefit to consumers but, should it deter entry and allow prices to return to their original level, the benefit is short-lived.
"To increase competition, the ACCC would encourage the implementation of planning policies consistent with general competition principles.
"It is the ACCC's view that the planning guidelines should be not be able to be used as a legal mechanism by incumbent firms to prevent new firms from entering the market and providing customers with alternative methods of service provision."