Picture: ISTOCK
Picture: ISTOCK

The Competition Commission is seeking a penalty against Ster-Kinekor for colluding with its closest rival, Nu Metro.

The commission said Ster-Kinekor Theatres, a subsidiary of Primedia, and Avusa subsidiary Nu Metro Entertainment engaged in market allocation in lease agreements at Cape Town’s V&A Waterfront.

It is unclear whether the commission is seeking 10% of Ster-Kinekor’s annual turnover or of Primedia’s annual turnover as a penalty. Primedia acquired Ster-Kinekor in 2007.

In terms of the Competition Act, 10% of annual turnover is the maximum fine that can be levied, suggesting that Ster-Kinekor has not co-operated with the commission.

On Friday, the Competition Tribunal said it had set aside two weeks to hear the matter. The hearing begins on May 8 and involves nine witnesses. Nu Metro and Ster-Kinekor are the two largest competitors in the film exhibition market.

According to its website, Ster-Kinekor owns more than 60% of the market.

The commission initiated the matter in May 2009 after Avusa provided evidence of collusion between the two film exhibitors and applied for leniency in the matter.

Nu Metro’s lease agreement with then-landlord Transnet Pension Fund gave the film company a right of first refusal relating to any film exhibition at the V&A Waterfront. When Nu Metro discovered that Ster-Kinekor had entered into negotiations to operate at the Waterfront, it filed an interdict at the high court in objection to this.

The two later entered into a settlement agreement, which was made an order of the court. In terms of the deal, Nu Metro would show only commercial films at the V&A Waterfront, while Ster-Kinekor would show only subtitled or "art" movies, as classified by Movieline, formerly a magazine and now a YouTube channel that reviews films.

This arrangement, which had continued from 1998 to at least 2012, amounted to market allocation, said the commission.

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