Competitive fears raised by video deal

THE proposed £20 million take-over of video rental group Xtra-vision by rival group Blockbuster is to be evaluated by the Competition Authority. The Minister for Enterprise and Employment Mr Bruton said last night that he had referred the deal to the authority and requested its views before the end of January.

The authority will now examine the takeover under which 225 video rental stores across Ireland would change hands. In a statement, Blockbuster and Xtra-vision said they were both surprised at the referral by the Minister, and promised to assist the Competition Authority in its deliberations.

Although Blockbuster has no operations in either the Republic or the North, it is thought the Authority may be concerned about the video giant's parent company, Viacom, which owns a 50 per cent share in CIC, a video wholesale distribution company. CIC has an estimated market share of between 15 and 20 per cent of the Irish market.

"Could Blockbuster use this to block new entrants to the market? Would this amount to a dominant position? These are the type of questions that the Competition Authority is there to answer," one observer commented.

Industry sources said that there was no effective line of command between Blockbuster and CIC.

Blockbuster's parent company, Viacom, owns Paramount. Paramount's films are distributed by CIC, which is jointly owned by Viacom and the whiskey manufacturer Seagram's.

"But although half of CIC is owned by Viacom, far less than 50 per cent of the films it distributes are Paramount movies, the sources added.

"Having had a careful look at this case, I believed that a more detailed assessment was required by the Authority in the interests of competition in this sector. Clearly, the interests of the consumers were a significant factor in arriving at my decision to have the Authority investigate the case," Mr Bruton said.

Under the Mergers and Takeovers (control) Acts 1978 to 1996, the minister may refer a proposed business deal to the Competition Authority. The Authority must then state its opinion as to whether the proposal would be likely to prevent or restrict competition

It must give its views in the context of the following criteria: continuity of supplies or services; level of employment; regional development; rationalisation of operations in the interests of greater efficiency; research and development; increased production; access to markets; shareholders and partners; employees; and consumers.