Regal Hit With New Antitrust Lawsuit Over Distribution of Blockbuster Movies

A new complaint is filed in New York as the Justice Department conducts its own investigation.
Courtesy of AEG

An independent movie theater owner in Queens, New York is the latest to bring an antitrust lawsuit against a major chain over the way first-run films are licensed.

Cinema Village Cinemart filed its action on Tuesday against Regal Entertainment Group over clearance practices.

According to the complaint, "Regal has used the immense buying power of its theater circuit arising from the large number of its theaters and screens in numerous markets in the United States— including many monopoly markets where it operates the only theater—to combine with and coerce film distributors to deprive Cinemart of fair competitive access to films."

This is the second lawsuit that Regal has faced with allegations of pressuring big film studios and harming competition. In fact, the earlier lawsuit brought in California was handled by the same attorney Max Blecher. That lawsuit was dismissed when a judge ruled that allegations about a conspiracy were too conclusory.

But a similar lawsuit against AMC in Georgia survived a motion to dismiss and according to recent regulatory filings, the Justice Department and some state attorney generals has been investigating whether exhibitors are using their market power to keep independent rivals from getting blockbuster releases. This suggests that an analysis on whether clearance practices survive scrutiny under a rule of reason might not be so pat.

Cinema Village Cinemart will now be testing how a New York federal judge analyzes the competitive effects of marketplace restriction. According to its lawsuit, Cinemart was able to show Warner Bros.' American Sniper when it first came out earlier this year while Regal's Midway Theater didn't in an alleged "act of protest."

"Thereafter and in furtherance of their agreement with Warner Bros., on February 2, 2015 [Cinemart’s booking consultant Arthur] Marblestone called Warner Bros. to confirm the next first run film 'Jupiter Ascenting' [sic] opening February 6, 2015," continues the complaint. "Warner Bros. then backed off of their previous commitment to allow the Cinemart to play all first run films with Midway day and date. Mr. Marblestone was informed that Warner Bros. headquarters in California was in talks with Regal on this issue. Late in the day on February 2, 2015, the Cinemart received a letter from Warner Bros. stating it would not continue the simultaneous exhibition."

The plaintiff says is now is unable to obtain licenses to first-run films from Disney, Lionsgate, Paramount and Universal despite offering "more advantageous terms than those Regal offered." The lawsuit, also claiming tortious interference, says that the film distribution giants are acting contrary to their own economic interest to placate Regal.

As for the competitive harm, the lawsuit adds, "It is likely that if Regal’s unlawful conduct continues, Queens will lose its sole independent theater," and what's more, more expensive concessions as the plaintiff talks about giving free popcorn to every patron that buys a ticket.

Here's the full complaint.

A Regal spokesperson was unavailable for comment.

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