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Foreign Anti-trust Laws:

Restrictions on Studio Distribution Abroad

By Li Y. Wang, Entertainment Lawyer

Distribution alliances of the Hollywood studios that impede competition may face foreign anti-trust actions. United International Picture (UIP) is a joint distribution alliance made of the three biggest U.S. producers, namely, Universal, Paramount, and Metro Goldwyn Mayer’s MGM/UA (currently owned by Sony Pictures). The European Commission received complaints alleging that UIP used block booking, the practice of granting rights to distribute certain films conditional on acceptance of other films in the package. The European Commission may block UIP operations because its exemption from European Union competition rules has expired and it is up for renewal again. UIP participants were not worried about the possible EC ruling because its franchise was set to expire in 2002, well before the EC could resolve the issue.

Other anti-trust problems occurred in Korea, where five major U.S. film distributors were found guilty of collusion for withholding ads in two Seol newspapers by the Korean Fair Trade Commission. Penalties were assessed against Columbia Tristar (Sony Pictures), Twentieth Century Fox, United International Pictures, Warner Brothers, and Buena Vista International. Future violations would lead to the closing of U.S. distributors’ offices in Korea.

The strength of studio distribution alliances abroad may also be a weakness when foreign anti-trust laws view these alliance as anti-competitive. Thus, the power of a studio distribution arm abroad does have some risks, and filmakers must consider this risk as well as the benefits of studio distribution when determining the best distribution abroad for their film.

Author acknowledges the contributions of Koh Chik-Mann, Variety; and Benedict Carver, Variety.

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