Blackstone Group / UGC Cinemas Holdings Ltd

OFT closed case: Completed acquisition by the Blackstone Group of UGC Cinemas Holdings Limited.

Affected market: Cinema exhibition of films

No. ME/1591-05

Full text of the decision: ugc.pdf

Undertakings in lieu of reference: blackstoneuil.pdf

Undertakings accepted decision

The OFT's decision on reference under section 22 given on 28 April 2005. Full text of decision published 28 June 2005.

PARTIES

The Blackstone Group (Blackstone) is an international private equity investment and advisory group. On 13 October 2004, it acquired the Cine-UK (branded Cineworld) cinema chain, which operates 34 multiplex cinemas in the UK.

UGC Cinemas Holdings Limited (UGC) is a UK and Irish cinema exhibitor, with 41 multiplex cinemas across the UK. The UK turnover of UGC for the financial year ended 2003 [ ] was £135.5 million.

TRANSACTION

On 1 December 2004, Blackstone (through wholly owned subsidiaries) acquired sole control of UGC. 

JURISDICTION

As a result of this transaction, Blackstone and UGC ceased to be distinct.  The UK turnover of UGC exceeds £70 million, so that the turnover test in section 23(1)(b) of the Enterprise Act 2002 is satisfied. The OFT therefore believes that it is, or may be the case, that a relevant merger situation has been created.

BACKGROUND

By way of a decision of 28 April 2005 (the Decision) the OFT announced that, on the evidence available to it, the OFT believed that it may be the case that the merger may be expected to result in a substantial lessening of competition in six areas, covering 7 UGC cinemas (see note 1). A copy of the Decision is attached at Annexe 1.

On this basis, the OFT decided that the merger would be referred to the Competition Commision unless Blackstone gave suitable undertakings pursuant to section 73 of the Enterprise Act to address the competition concerns arising from the merger.

Blackstone indicated a willingness to give undertakings to make divestments in each of the 6 localities where Cineworld and UGC cinemas overlap and the OFT believes that it is or may be the case that a substantial lessening of competition will, or may be expected to, arise as a result of the merger. 

On 17 May 2005, the OFT published the proposed undertakings inviting interested third parties to give their views on them to the OFT. The OFT did not receive any responses to suggest that the proposed undertakings were not appropriate to remedy, mitigate or prevent the competition concerns identified.

DECISION

The merger would have been referred to the Competition Commission if Blackstone had failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concern outlined above. The OFT has decided to accept the proposed undertakings in lieu of reference as they address that competition concern.

This merger will therefore not be referred to the Competition Commission and the undertakings, which have been signed by Blackstone LR Associates (Cayman) IV Ltd. (on behalf of Blackstone) and its subsidiary Cineworld UK Limited, the text of which is attached as Annexe 2 to this decision, came into effect on 21 June 2005.

NOTES

  1. Boldon, Harlow, Swindon, Wigan, Birmingham Great Park, and Ealing/Slough.

Help us improve GOV.UK

Don’t include personal or financial information like your National Insurance number or credit card details.