Entertainment One Takeover of Alliance Films Approved

Canada's Competition Bureau explains why it has allowed the merger of the country's two biggest distribution players.

TORONTO - Canada’s Competition Bureau said Friday that the upcoming merger of Entertainment One and Alliance Films will not reduce competition in the country’s indie film distribution sector.

Following a recent probe, the government agency concluded that both Canadian indie distribution players were “significant competitors” for foreign and local films to release in Canada and hold “substantial market share.”

At the same time, Entertainment One earned a so-called no action letter from Canada's competition referees, allowing it to go ahead with its takeover of Alliance Films.

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“… the Bureau found that the policies in place affecting the promotion and distribution of Canadian films would make it unlikely that a substantial lessening or prevention of competition for the distribution of Canadian films would result from the proposed acquisition,” the Competition Bureau said in its ruling.

“Further, the Bureau found that for the distribution of non-Canadian films, a substantial lessening or prevention of competition was unlikely due to effective competition remaining in the market,” the agency added.

Entertainment One is to pay around $230 million to Alliance owners Goldman Sachs Capital Partners and Investissement Quebec.

The Toronto-based indie producer and distributor said Thursday that it expected to shortly complete the transaction, after having secured required approval from the Canadian Competition Bureau.

The merged company will have broader international reach across the U.S., Australia, the Benelux countries and Spain as well as output deals in Canada with The Weinstein Company, Focus Features and Relativity Media.