Future of UIP hangs in balance

Date: 03/09/1998

By Peter Chapman

HOLLYWOOD film distribution unit United International Pictures (UIP) faces an uphill struggle to keep its exemption from EU anti-trust rules.

The European Commission will hold formal hearings later this month to give UIP a last chance to oppose competition chief Karel van Miert's plan to withdraw the privilege.

Van Miert stunned UIP earlier this year when he said the exemption was "no longer beneficial" and that there was "no good reason to renew it".

His services fired off a 'statement of objections' to UIP in January outlining the institution's legal arguments.

But although the 24-25 September hearings with interested parties and member state officials offer UIP a glimmer of hope, a spokesman for Van Miert said there was "no reason to suggest" that the Commissioner would "change his view".

The last anti-trust waiver granted to the alliance between Hollywood studios Paramount Pictures, Metro-Goldwyn-Mayer and Universal ran out in 1993. The venture has been allowed to continue pending a new decision.

Previous exemptions were granted in the belief that UIP was able to bring more films to EU cinemas more efficiently than existing rivals. Since then, however, Europe's own industry has picked itself up and Van Miert sees little justification for allowing the three-way distribution venture to continue.

Under EU anti-trust rules, UIP has the right to respond to the Commission's dossier of evidence against it, much of which was gathered during a series of 'dawn raids' by officials last year.

UIP legal counsel Brian Reilly insists the venture has a thorough legal argument against Van Miert's view. He claims that nothing has changed since the Commission granted exemptions and says pooling the three studios' resources results in significant cost savings.

In the meantime, Reilly insists it is "business as usual" for UIP, with the controversy having "no impact" on its daily operations.

However, industry insiders warn that the future of UIP hangs in the balance, whatever the Commission finally decides after the latest round of appeals.

The venture's franchise agreement expires in 2002 and there are doubts as to whether the three partners will keep it going beyond that date.

UIP: United International Pictures.