The Justice Department will attempt to terminate Paramount's consent decrees, the historic deals that have prevented studios from owning movie theaters for the past 70 years.
Makan Delrahim, head of the department's antitrust division, made the announcement Monday in a speech at the American Bar Association's antitrust forum. He argued that the decrees are a relic of the past, as the old studio system expired long ago.
"We determined that the decrees, as they are, no longer serve the public interest, because the horizontal conspiracy – the original violation that animates the decrees – has been broken," Delrahim said. "The Division considers that the consent decrees no longer serve the interests of consumers."
The department announced in August 2018 that it would revise Paramount decrees.
The decrees came from a 1948 Supreme Court ruling alongside the government in a decade-long battle with major studios. The decision permanently divorced film production from distribution. The decrees also prohibited anticompetitive practices in theatrical distribution, such as "block booking," where multiple films are sold together, and "circuit trading," in which studios have a contract with all theaters on a single circuit.
But as technologies changed, the Justice Department came to see the decrees as outdated. Now studios can sell their movies directly to customers through streaming services. In his speech, Delrahim argued that the antitrust division should not hinder "innovation to improve the consumer," even while watching MoviePass, the failed subscription service.
"We can't pretend that the movie distribution and screening business remains the same as 80 years ago," he said.
The Justice Department will request a court to close the decrees, with a two-year deadline for circuit trading and reservation blocking. He said the division is not stating that these practices are now legal, however.
"Instead, under modern antitrust law, the Division will review the vertical practices initially prohibited by Paramount decrees using the rule of reason," he said. "If reliable evidence shows that a practice undermines consumer welfare, antitrust agents remain ready to act."
In October 2018, the National Association of Theater Owners urged the department to maintain the block reservation ban, arguing that without it studios could force theaters to accept their full list in order to achieve the latest hits. at the box office. This would effectively prevent smaller films, especially documentaries, the organization argued.
"If exhibitors were required to reserve the vast majority of their screens in major studio films for most of the year, that would leave little or no room for major smaller studio films," the group said, citing documentaries as "RGB." and "Won't you be my neighbor?", which was theatrically successful. "Preserving the block reservation ban is vital to the ability of all distributors, large and small, to take their films to the big screen and reap the benefits of a theatrical performance."