Antitrust In the News This Week

November 7, 2014 · Filed Under Uncategorized · Comment 

Justice Department Sues to Block Cinema Ad Merger

On Monday, the Justice Department filed suit in New York in an attempt to block NCM’s $375 million acquisition of Screenvision LLC. The DOJ alleges that the combined company would be able to control advertising on 88% of the country’s movie screens, and cites statements from the parties indicating anticompetitive motives.

Aggressive competition between NCM and Screenvision for movie theaters led NCM to observe that “we need to buy [Screenvision] before either us or [Screenvision] does a stupid deal.”

By April 2014, NCM arrived at what it called a “Strategy Decision Crossroads.”  As NCM had told its board it could either acquire Screenvision, which would give NCM the ability to “Control Selling Tactics,” including “Pricing,” or it could compete through more aggressive pricing and adding theaters to its network.  NCM chose to buy out its competitor.

NCM viewed Screenvision’s “new strategy of undercutting [NCM’s] pricing by 50 percent (or more) [as] a direct threat to [NCM’s] business model” and “a very unusual strategy in a duopoly.”

The companies insist that the merger will allow the new company to compete more effectively and continue to deliver value to advertisers.

LCD Suit to Test Global Reach of U.S. Antitrust Law

The Wall Street Journal reports on a lawsuit brought by Motorola alleging price fixing by “Samsung Electronics Co. , Sharp Corp. , LG Display Co. and other Asian companies”. In March, the Seventh Circuit ruled that most of Motorola’s claims could not be heard as they involved conduct which did not directly effect United States commerce. However, after considerable back and forth, that opinion was vacated and arguments will now be heard on the merits of the case.

The FTC’s amicus brief can be read here.