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Competition

PR(02)29: EFTA Surveillance Authority opens proceedings against the film rental practices between distributors and cinemas in Norway

20.12.2002

The EFTA Surveillance Authority has started formal proceedings against the associations representing film distributors and municipal cinemas in Norway.  In a statement of objections the Authority warned Norske Filmbyråers Forening (the association of film distributors) and Film & Kino (an association of mainly municipal cinemas) that their film rental agreements contain restrictions on prices that constitute an infringement of the competition rules of the EEA Agreement.

Film rental agreements were entered into between Norske Filmbyråers Forening and Film & Kino in January 2002.  The agreements lay down conditions for the distribution of films to cinemas in Norway: they stipulate the rates for film rentals applicable between distributors and cinemas.  For the purpose of setting these rates, cinemas are split into different categories according to their size, for which different rental rates apply.  The members of Norske Filmbyråers Forening and Film & Kino are obliged to comply with the terms laid down in the film rental agreements.

Article 53 of the EEA Agreement prohibits agreements which have as their object or effect the restriction of competition and which may affect trade between the Contracting Parties to the EEA Agreement.  The investigation into the film rental agreements was initiated by the EFTA Surveillance Authority, following a complaint lodged by Oslo Kinematografer AS (a cinema operating in Oslo) in March 2002.

The Authority considers that the Norwegian film rental agreements contain serious restrictions of competition, i.e. price fixing provisions, which constitute an infringement of the EEA Agreement. 

After a careful analysis, the EFTA Surveillance Authority has come to the preliminary conclusion that the agreements cannot qualify for an exemption under the EEA competition rules. Despite the fact that the film rental agreements may have some advantages, the Authority considers that the alleged benefits cannot outweigh the negative effects on competition resulting from the agreements.  These negative effects on competition are serious as virtually the entire Norwegian market for the distribution of films is affected by the arrangement, such that price competition is excluded.  In addition the Authority believes that alleged benefits for example for smaller operators may be achieved by introducing alternative measures which are less restrictive of competition.

After receiving a statement of objections, companies usually have two months to submit their defence in writing.  They also have the possibility to plead their case during an oral hearing.  Only after having heard the defence of the companies can the EFTA Surveillance Authority take a final decision.

For further information, please contact Mr Amund Utne (tel.: + 32 2 286 1850) or Mr Tormod S Johansen (tel.: + 32 2 286 1841).




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