Independent Cinemas File Amicus Brief In Paramount Decree Case

Independent Cinema Alliance (ICA), an advocacy group, filed an amicus brief in opposition to the Department of Justice’s motion to terminate the Paramount Consent Decrees. The case is filed in the New York Southern District Court. ICA is represented by Becker & Poliakoff.

The Paramount Decrees were established in 1948 as part of an effort to curb an emergent oligopoly among film studios. The case was a landmark antitrust case aimed at stopping vertical integration and is seen as the end of the Hollywood studio system. Film studios either owned or were affiliated with theaters, which were only allowed to show films from the studio that had a relationship with it. Studios not only produced the films, but they also had writers, directors, producers, and actors under contract on staff, and owned the film processing and editing studios, resulting in a near-total vertical integration. This integration, coupled with collaboration among oligopolistic studios, resulted in accusations of attempted monopolization, leading to the decrees.  The decrees also prohibited block booking, the practice of bundling multiple films into one theater license. The decrees have shaped the film industry for the past 70 years.

The DOJ announced its intent to review 1,300 “legacy” antitrust orders. After review, the Antitrust Division determined that the Paramount Decrees “have served their original remedial purposes and no longer serve to promote or protect competition and innovation.” Further, “The Paramount decrees long ago ended the horizontal conspiracy among movie companies in the 1930s and ‘40s and undid the effects of that conspiracy on the marketplace,” Makan Delrahim, Assistant Attorney General of the Justice Department’s Antitrust Division, said. “The Division has concluded that these decrees have served their purpose, and their continued existence may actually harm American consumers by standing in the way of innovative business models for the exhibition of America’s great creative films.”

The ICA stated, “the current DOJ treats independent cinemas as inconsequential players in an industry rightly dominated by Big Production, Big Exhibition, and increasingly, Big Streamers.” They argued that independent companies greatly contribute to the film industry, serving their communities and creating meaningful content.  “In sum, motion picture consumers benefit enormously because, compared to big circuits, independents vitally contribute more diverse content, in more diverse places, more inexpensively, and in more diverse and creative ways. But they achieve these pro—competition and pro—consumer benefits increasingly in competitively hostile and cost—crippling circumstances.” ICA claimed that terminating the Paramount Consent Decrees would significantly hinder independents ability to thrive and compete in the film industry.

The ICA added that the “DOJ suggests a standard of review contrary to case law and common sense.” The “DOJ cannot now shift the burden to some other party to ‘prove’ the future recurrence of antitrust abuse.” ICA stated that the “DOJ project concerning ‘legacy’ consent decrees sweeps too far in targeting the Paramount Consent decrees, which have brilliantly served the motion picture industry.”  Further, “[o]n every past occasion, the DOJ has concluded that there was no reason to disturb the Decrees…[o]n this most recent occasion, however,… the DOJ was not really investigating the motion picture industry or even the Paramount Consent Decrees, but was instead engaged in a vast housekeeping operation to get rid of nearly 1,300 so-called ‘legacy’ consent decrees.” ICA finally added that the DOJ is more concerned that this decree did not have a termination date than with the content of the Paramount Consent Decree.

Additional briefing is expected in the coming weeks.