Judge Rules AMC Must Face Antitrust Lawsuit for Depriving Spanish-Only Filmgoers

AMC Theaters Exterior GETTY H 2016
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Siete isn't as big a number as setenta, but it's still large enough to carry an antitrust lawsuit against American Multi-Cinema forward.

The film exhibition giant is facing Sherman Act claims brought by Houston-based Viva Cinemas Theaters, which contends that AMC pressured Disney, Sony, Universal and other studios into withholding first-run films from a competitor. Viva serves the Hispanic community, and what makes this lawsuit unique from the many others challenging so-called "clearance pacts" is the specific allegation that AMC's anti-competitive behavior has deprived Spanish speakers of being able to see Star Wars and other hit films.

In reaction to the lawsuit, AMC pointed to the fact that many Hispanics speak English. Attacking the notion that Viva defined a relevant product market, the defendant argued that films in English are "interchangeable" for many Hispanics. According to its math, "Only approximately 7 percent of Houstonians are Hispanic moviegoers who exclusively speak Spanish."

How about preferences?

AMC used a soda analogy.

"Many soda drinkers strongly prefer Coke over Pepsi, and vice versa," argued AMC in a motion to dismiss. "But that 'preference' does not somehow suggest that Coke and Pepsi are in different markets, even if some subset of Coke drinkers might have such a strong preference that they would never switch to Pepsi, no matter how much the relative price of Coke increased."

U.S. District Judge Alfred Bennett isn't buying the logic.

"AMC does not explain why 7% of Houston's population is not a sufficient submarket," he writes in rejecting the dismissal bid. "Viva does concede that there were people capable of seeing movies in both English and Spanish, however, this does nothing to address the 7% (assuming that is the correct number) that cannot observe a movie without dubbing or subtitles."

Bennett also finds (here's the opinion) that Viva has plausibly pled a defined geographic market — either Houston or the zones around the parties' theaters in the region.

Some exhibitors and distributors have recently backed away from clearance practices. According to the documents in this case, the only time that studios tested AMC on its threat not to show newly released films given to Viva was during the release of Disney's Planes. The judge notes, "True to its word, AMC did not show the movie at its AMC Dunvale location after Disney allowed Viva to show the movie."