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Two S. Korean cinema chains fined $5 million for unfair practices

December 22, 2014

A CJ CGV theater in Seoul on Oct. 21, 2013 (Yonhap)

(Yonhap) — South Korea’s corporate anti-trust watchdog on Monday slapped fines totaling 5.5 billion won (US$5 million) on two of the country’s largest cinema chains for discriminatory film screening practices.

The Fair Trade Commission (FTC) said both Lotte Cinema and CJ CGV gave preferential screen quotas to films produced by their affiliates or in-house movie distribution firms. Such actions placed non-affiliate film agencies and movie distributors that import films directly from abroad at a disadvantage.

Affiliates of the two chains enjoyed more screen time with their films shown on more screens in multiplex theaters.

Besides issuing fines, the FTC said it has reported the violations to state prosecutors for criminal investigation.

“The latest move marks the first time ever that the commission has taken tough legal action against large vertically integrated cinema chains,” an official source said.

He added that the two chains also issued discount tickets for movies without prior consultation with independent distributors, while in the case of CGV, the company forced a film producer to sign unfavorable contracts. Such an unfair contract could be signed because CGV holds the upper hand vis-a-vis the film producing company.

The commission said it ordered remedial action to be taken against all unfair trading practices.

It added both companies agreed to take steps to restore market confidence, promote fair competition and support screening of independent and low-budget movies in the future. They, moreover, agreed to create a standing cooperative panel with film producers and outside distributors to discuss all outstanding issues.

On actions taken, the FTC claimed it sent a clear message to cinema chains that it will not tolerate unfair practices, and that the watchdog is committed to fostering fair competition and giving more opportunities to smaller filmmakers and independent distributors.