UIP Cinema

United Kingdom

In 1993 UIP, a joint film distribution company, requested that the Commission renew a 1989 decision exempting agreements for the distribution for exhibition in cinemas of feature films, short subjects and trailers. The 1989 decision was one of the few individual exemptions granted by the Commission to joint selling arrangements. The parties had to provide various undertakings and to amend their original agreements. Last year the Commission refused to renew the exemption and considered that the renotified UIP agreements appeared to be incompatible with Article 81 of the EC Treaty. Therefore, the parties made new amendments to the agreements and provided new undertakings in addition to the undertakings given during the original procedure.

Under the re-notified agreements, UIP retains the right of first refusal so that the parties are obliged first to offer their films to UIP and, if UIP decides not to distribute a film, the parties are free to use other distributors. Originally, the whole EC was considered as one single territory. The parties have offered to amend the provisions so that each Member State is now considered as a single territory except for Belgium/Luxembourg and the UK/Ireland. The Commission viewed this amendment as necessary to reduce the restriction of competition. The parties have also undertaken to delete the obligation for UIP to maximise cross-receipts for each film distributed by it. However, a best efforts provision will be retained in the individual franchise agreements concluded between UIP and individual partners.

The undertakings from the 1989 decision as repeated or amended are the following:
- UIP will make itself available to co-finance, acquire distribution rights to or distribute feature films of third parties in the EEA. UIP will publicise such availability to independent producers. Appropriate publication is also required annually for the nature and extent of this activity.
- Each of the parents will make themselves available individually to produce, finance, co-finance or acquire distribution rights to local films in the EEA.
- UIP and the parents will take initiatives to promote the professional development of young European filmmakers and their films.
- No parent’s committee would discuss distribution plans of individual films of any parent. Further, except in case of co-financing, co-production or similar, each parent will set dates for the release of its films through UIP individually without seeking an agreement with any other parent, and UIP will not disclose such dates until authorised or until the date becomes known to third parties.
- A new conciliation procedure is established in addition to the already established arbitration procedure to resolve disputes between UIP and exhibitors for the supply of prints. This would ensure that UIP deals with exhibitors on a fair and equitable basis.
- UIP will not apply block-booking practices, i.e. make the acceptance of a film conditional upon the acceptance of any other film.
- UIP will supply films to cinemas controlled by the parents on an arm’s length basis, recognising that differences in licence terms may be justified by commercial differences between cinemas. This would ensure that third parties have access to the parents’ films on fair conditions. (OJ C205 20.07.99)