Cinema distributor accused of abusing monopoly

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Six local cinema operators have accused foreign invested film distributor Megastar of abusing its market position to fix prices, hurting both operators and moviegoers alike.

The companies, including Galaxy, Cinebox and Saigon Movies Media, have reported the case to the Vietnam Competition Authority after unsuccessful negotiation attempts with Megastar.

They said since June 2009 Megastar has insisted on a minimum  payment of VND25,000 (US$1.30) on every ticket to a movie that it distributes. This royalty means theaters will earn little to nothing on set ticket prices in the VND25,000-40,000 range.

The problem is Megastar has won exclusive rights to distribute many foreign blockbusters in Vietnam. The company, a joint venture between local publisher Phuong Nam and Envoy Media Partners from British Virgin Islands, is also a cinema operator with its own theaters. It now runs six movie theater complexes in big cities after closing a $4 million eight-screen cineplex in Ho Chi Minh City's District 7 at the end of April due to poor ticket sales.

Nguyen Minh Ngoc, a Galaxy representative, said the payment policy imposed by Megastar last year has put other theaters in a dilemma.

If they don't agree with minimum payment, they will not have new movies to show. But if they follow the policy, they have to either raise ticket prices and lose customers, or keep prices and incur losses, she said.

The companies said they have struggled and even suffered losses since the beginning of this year due to Megastar's pricing policy.

"We have requested negotiations with Megastar since June 2009 to find a solution but there has been no responses," a representative of a company said. "Megastar kept insisting that we accept their unreasonable policy."

The six cinema operators said according to ticket pricing conventions, theater owners and film distributors share ticket revenues at an agreed percentage that ensures profits for both sides as well as reasonable prices for moviegoers.

The case is being reviewed by the Vietnam Competition Authority.

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