Regulators Reverse Decision to Halt Cinemark Mexico Buyout
Cinemark's exit from Mexico will leave the market with an exhibitor duopoly.
MEXICO CITY – So much for backing competition in Mexico's concentrated exhibition market.
The Federal Economic Competition Commission here has reversed a decision to block the sale of Cinemark's 31-theater Mexico circuit to No. 2 exhibitor Cinemex.
In August, regulators voted 3 to 2 in favor of halting the proposed buyout, citing concerns that it would leave the Mexican market with just two major players. Texas-based Cinemark appealed the ruling.
A CFCE statement released Tuesday said that Cinemark, compared with its competitors in Mexico, has a "limited presence" in the market and deemed it "has not helped increase competition in the sector."
Market leader Cinepolis corners about 66 percent percent of the market, and with the acquisition of some 290 screens Cinemex will control an estimated 31 percent, leaving the remaining 3 percent for indie theaters and family-run chains.
"Most commissioners felt that there is no evidence to conclude substantial risks to competition in the film exhibition market arising from a possible merger of the two companies," the CFCE said.
Cinemark's Mexico theaters pulled in about $74 million last year, but the company had been looking to sell the circuit to pursue better growth opportunities elsewhere in Latin America.