Korea’s two largest movie chains fined for unfair competition

December 24, 2014

Korea’s two biggest movie chains — CGV and Lotte Cinema — have been fined a combined five million U.S. dollars for engaging in unfair practices on December 22, 2014.

These practices include giving affiliate distributors more screens to show their movies and allowing them to screen the films for longer periods of time.

The Fair Trade Commission said the moves gave CJ CGV and Lotte Cinema an unfair advantage at the box office.

The FTC pointed to two hits in particular: CJ E&M’s “Masquerade,” a 2012 film that attracted more than 10 million viewers, and Lotte Entertainment’s “The Taste of Money,” which was released that same year on triple the number of screens than competing films.

The watchdog said the two movie chains also gave out free movie discount coupons without the consent of distributors.

“It’s meaningful because the commission is taking strong legal action for the first time against the unfair practices of large, vertical integrated cinema chains.”

Following up on the fines, the culture ministry says it will more closely monitor the screening practices of Korean movie chains to ensure that no benefits are being handed down to affiliates.

The case has put the oligopoly of the Korean film industry back in the spotlight.

The top three multiplexes in Korea make up more than 90 percent of screen shares in the country.

About 30 percent of all films produced each year aren’t even released in theaters.

Experts say a new platform for independent, low-budget films is needed for diversification.

“I think it is a great idea for major companies to build theaters designed specifically for smaller films, but not if it’s merely a temporary means to avoiding the separation between distribution and screening.”

Market watchers say if these theaters reserved for small firms are given enough support, a positive synergy effect in the industry can be created. (By Lee Ji-yoon – Arirang News)