DOJ Reviewing Paramount Consent Decrees

On August 2, 2018, the DOJ’s Antitrust Division announced that it would begin a review of legacy consent decrees “regulat[ing] how certain movie studios distribute films to movie theatres.”  The Paramount Consent Decrees have been in place for almost 70 years.  U.S. v. Paramount, 334 U.S. 131 (1948).  The Supreme Court decision forced major studios to sell their theater chains. Since that ruling, the Paramount decrees, have governed the way that studios do business with exhibitors. The decrees have prohibited certain “motion picture distribution practices, including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theatres in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting overbroad clearances (exclusive film licenses for specific geographic areas).”

The DOJ has indicated its review will take into account the changes in the identity of movie theatre owners, the increased number of movie theaters in a geographic area, the increased number of screens in movie theaters, and increased number of viewing platforms available to consumers.  The review is part of the Antitrust Division’s initiative to terminate long-standing antitrust judgment, including many that have no termination date.

“The Paramount Decrees have been on the books with no sunset provisions since 1949. Much has changed in the motion picture industry since that time,” Makan Delrahim, the DOJ’s antitrust chief, said in a statement. “It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition.” 

If the DOJ terminates the Paramount Decrees, it could lead to vertical integration of studios and theaters.  The result would be ironic given that the DOJ is currently appealing its loss in its attempt to prevent AT&T from vertically integrating with Time Warner.

As part of the review, the DOJ is interested in comments to the following issues:

• Do the Paramount Decrees continue to serve important competitive purposes today?  Why or why not?
• Individually, or collectively, are the decree provisions relating to (1) movie distributors owning movie theaters; (2) block booking; (3) circuit dealing; (4) resale price maintenance; and (5) overbroad clearances necessary to protect competition? Are any of these provisions ineffective in protecting competition or inefficient? Do any of these provisions inhibit competition or cause anticompetitive effects?
• What, if any, modifications to the Paramount Decrees would enhance competition and efficiency? What legal justifications would support such modifications, if any?
• What effect, if any, would the termination of the Paramount Decrees have on the distribution and exhibition of motion pictures?
• Have changes to the motion picture industry since the 1940s, including but not limited to, digital production and distribution, multiplex theaters, new distribution and movie viewing platforms render any of the Consent Decree provisions unnecessary?
• Are existing antitrust laws, including, the precedent of United States vs. Paramount, and its progeny, sufficient or insufficient to protect competition in the motion picture industry?

Third parties have a 60-day period for public comment. The deadline for comments is October 4, 2018.

Andre Barlow
(202) 589-1838
abarlow@dbmlawgroup.com