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EC bids to stop Hollywood
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February 6, 1998: 9:26 a.m. ET
Decision could dismantle the largest movie distributor outside of U.S.
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NEW YORK (CNNfn) - A decision by the European Commission reportedly may force three major Hollywood studios to dismantle their joint European distribution vehicle, the world's largest theatrical motion picture distributor outside of the U.S.
Karel Van Miert, EC competition commissioner, has decided not to renew an exemption that allowed United International Pictures to operate as the collective distributor for Viacom Inc.'s Paramount Pictures, Seagram Co.'s Universal Studios and Metro-Goldwyn Mayer Inc.'s MGM/UA, the Financial Times reported Friday.
The move could have a dramatic effect on the respective companies' expansion plans in the European market. Indeed, in its recent initial public offering documents, Metro-Goldwyn-Mayer warned that it faces the risk of lower revenue or profitability if anything should happen to the partnership.
The company was formed in 1970 by Paramount and Universal and was renamed United International Pictures in 1981 when MGM/UA became an equity partner.
In 1989 and 1993, the EC allowed the company to compete in the marketplace, granting exemptions to rules outlawing restrictive or exclusive agreements.
United International Pictures has two months to mount a formal appeal of the EC's preliminary ruling. There is no deadline for a final decision from the commission.
Among the most vociferous critics of the partnership are French film companies, which argues its existence hinders European film production.
United International Pictures has been responsible for a string of blockbusters, including The Lost World and Tomorrow Never Dies.
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