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Friday, April 01, 2005

Cinemas and the Competition Act 

On Monday, three cinema operators announced that they would raise ticket prices from next month. Today, a report in The Straits Times says that such a move would be illegal under the new guidelines to the Competition Act that takes effect next year.

The move by three cinema operators to raise ticket prices in unison is one that could be deemed illegal under a tough new law that takes effect next year. The cinemas’ move could be construed as price-fixing, which the new law frowns upon, said the Competition Commission in response to queries from The Straits Times. This practice is defined by the Competition Act as an agreement which “directly or indirectly fixes purchase or selling prices, or any other trading conditions”...

The nub of the problem is that three cinema operators...agreed to raise prices together. The three, which form the Cinematograph Film Exhibitors Association (CEFA), announced on Monday that they will raise weekday prices of tickets by 50 cents and weekend prices by $1 from next month. It said the hike was to cover the increase in GST and higher utility costs. The three account for 80 per cent of total box office sales here.

The new law takes effect on Jan 1, so the cinema operators’ move is not illegal — yet. But the [Competition Commission] urged the CFEA to “ensure that it complies with the provisions on anti-competitive practices and agreements when they come into force”.
As it often does, The Straits Times manages to get a juicy quote:

The operators, however, are not backing down. The CFEA’s chairman, Mr Shaw Vee King, who is also Shaw’s managing director, said: “We are no cartel. All along, as an association, we have implemented price increases when we felt it was timely.”
And a timely quote, too, for today’s paper.

Comments:

This comment has been removed by a blog administrator.

 
Thanks for your snippet off the ST. :)

http://shianux.jiyuuu.org/2005/04/04/95/antitrust_why_state_intervention_is_anti-competitive/

 
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