CRA advised Cineworld on its completed acquisition of five Empire cinemas. Three of the Empire cinemas had a local overlap with Cineworld, with the case mainly revolving around the local competition for the Cineworld in Luton due to a concern that the Empire in Hemel Hempstead is one of its main competitors.
The CRA team was led by Matthew Bennett and included Simon Chisholm and Gerhard Dijkstra. CRA’s analysis demonstrated that the competitive constraint between these cinemas was limited and that sufficient competitive constraints remained post-merger. In particular CRA showed that the CMA’s own survey evidence demonstrated that diversions to the parties were low, when the outside option of no longer going to the cinema was included. This was supported by customer location evidence that showed that the vast majority of customers were drawn from areas where there was no overlap – perhaps unsurprisingly given the prospect of driving up/down the M1 to catch a movie in rush hour! Finally CRA also demonstrated that despite the substantial refurbishment of Hemel Hempstead and its corresponding increase in revenues there was no concurrent decline in revenues at Cineworld Luton.
The CMA accepted these arguments and concluded that given the weakness of the constraint, and the existence of other rival cinemas, there would be no substantial lessening of competition and cleared the merger unconditionally. The CMA’s decision can be found here.
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