Vietnamese film companies file joint petition against S. Korean cinema giant

By Vu Van Viet   May 17, 2016 | 08:34 pm PT
CGV, the leading film distributor in Vietnam, is allegedly imposing unfair profit sharing on its distribution of Vietnamese films throughout its extensive cinema chain.

In a joint petition to the Vietnam Cinema Association, eight domestic film producers and distributors alleged that South Korea's CGV has put them at a disadvantage by using its market dominance to claim an unreasonable share of box office revenue from the Vietnamese films it screens and distributes throughout the largest multiplex cinema chain in the country.

“With the overwhelming number of cinemas in the market, CGV has been imposing an unreasonable revenue sharing ratio on movies distributed at its cinema chain. Vietnamese movies produced by CGV and screened at other theaters have a share ratio of 55/45, of which CGV enjoys 55 percent of the profit. Domestically produced movies released at CGV’s theaters have the opposite ratio of 45/55 in the first week (CGV gets 55 percent share), and that falls in later weeks,” stated the signatories, including BHD, Galaxy, Skyline, Golden Media, Saigon Media, MVP, Early Risers and VAA Company.

With CGV theaters currently accounting for 40 percent of cinemas in the country, film distributors and producers have no option but to accept that "unreasonable" profit sharing ratio, which they stressed is unprecedented in the world, otherwise they risk losing 40 percent of their movie revenue.

In the document, the companies also emphasized that CGV is applying different commercial conditions to the same transactions, which causes unfair competition and may violate the Competition Law.

In addition to the unfair proportion, the eight complainants also claimed that CGV tends to favor distributing foreign films, especially those produced in South Korea, by releasing them in larger numbers and in primetime slots. These tactics have forced Vietnamese producers to screen their movies in theaters with smaller audiences and limited time slots. The domestic companies want the government's regulatory agency to take action in line with Vietnam's laws and international rules to restrict this abuse of CGV's dominant position, which might lead to a monopoly in the market.

Vu Thi Bich Lien, director of Golden Media, added: "CGV started doing this a few years ago after they'd expanded to hold 40 percent of the market. Our latest movies suffered the same unreasonable sharing ratio in CGV’s theaters."

Ngo Thanh Van, a Vietnamese actress who gained fame from the 2007 hit movie “The Rebel”, spoke on behalf of her company VAA. "My company signed the petition submitted to the Vietnam Cinema Association because I disagree with the current revenue sharing rate imposed by CGV. It is time for us to speak up and ask for equality. 2016 is seeing a surge in the number of Vietnamese movies, and domestic producers are investing heavily in their own movies. They will not be able to earn enough money to repay their investors and make movies in the future with the current CGV revenue rate.” The actress also called for more support and respect from major foreign movie distributors for Vietnamese movies.

In response to the petition, CGV Corporate PR Manager Luu Hanh stated in a press release: “CGV has always obeyed Vietnam’s regulations on film distribution and screening. In fact, CGV and related parties together have developed and applied a consistent movie revenue sharing ratio with different distributors based on the quality of the film and theater numbers. CGV has never practiced discrimination or bias towards any distributor. […] Besides, for other distributors’ movies that are released at CGV’s theaters, we always support them with promotional activities in our theaters."

The representative added that by publishing the information in the contracts signed between CGV and related parties without CGV’s consent, the eight companies are violating the confidentiality clause. In addition, for companies who have never signed any contract or film distribution partnership agreement with CGV, their participation in the petition is unfounded and inconsistent with the law.

This is not the first time the theater chain has been on the receiving end of complaints from domestic film producers. In 2010, when the company was still operating under the name Megastar, it was sued by domestic film distributors for imposing limited time slots and theater and film rental related issues. After an investigation conducted by the Vietnam Competition Authority, the plaintiffs, including Galaxy Studio, withdrew their complaint while CGV bore the VND100 million ($4,482) court cost.

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