On 1 October 2008, the Council ruled that the conditions imposed in 1997 on the Kinepolis Group, when it granted approval for the merger of the Group Bert and Group Claeys, should be maintained for an additional period of three years. This Council’s ruling came after a judgment of the Court of Appeals triggered by an appeal launched by the Belgian Federation of Cinemas, Utopolis and UGC. The Court had annulled the Council’s decision of 16 April 2007 to abolish the conditions that had originally been imposed in Kinepolis.
The Council first ruled that, in order to ensure that all parties to the proceedings would be informed about the additional factual and legal elements in relation to the consequences on the market of the possible abolition or revision of the commitments, access should be given to the non-confidential version of Kinepolis’ supplementary request as well as to the Auditors’ supplementary report, but not to the inventory or other elements of the file.
In its second decision, the Council stuck to its previous market definition, finding that the markets for the screening of films in cinema theatres are local in scope. The Council then analysed each individual condition previously imposed on Kinepolis in turn. Regarding the prohibition on Kinepolis to request or demand that film distributors provide exclusivity or priority for the distribution of films and the prohibition to reserve, promote more intensively or grant any other favourable treatment to films that Kinepolis distributes itself, the Council held that, in light of the developments in the film distribution sector (in particular the digitalisation of film screening), maintaining these conditions for a limited period in time was required to guarantee a broad offer of films for competitors as well as consumers
The Council then assessed the condition that Kinepolis should not create or acquire new cinema complexes, nor expand, renovate or replace an existing complex (where more than 20 per cent new seats or cinemas would be created) without prior approval. The Council ruled that the creation and acquisition of new cinema complexes should remain subject to prior approval, given Kinepolis’ important market share (43.83% in 2008) and the preservation of the possibility for competitors to acquire market share in the so-called “black spots” in certain regions of Belgium (i.e. regions where there would still be space for expansion or where Kinepolis is not yet an important player). The Council further stated that by maintaining this condition it would remain able to assess whether such planned investments would lead to additional local market power for Kinepolis. In this context, the Council emphasised the importance to preserve a plurality of cinema offerings. It also clarified that an acquisition as foreseen in this condition should be understood as the acquisition of control in the sense of merger control rules.
However, the Council held that prior approval was no longer required for the expansion, renovation or replacement of existing complexes as these can be considered as forms of management and adaptation of existing infrastructure, and as a function of changing circumstances and consumers’ preferences. As a result, these were held to be very different from the creation or acquisition of new cinema complexes, where further growth takes a central role.