United States, et al. v. AMC Entertainment Holdings, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement, 80799-80810 [2015-32629]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 80, Number 248 (Monday, December 28, 2015)]
[Notices]
[Pages 80799-80810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32629]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States, et al. v. AMC Entertainment Holdings, Inc., et 
al.; Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of America, et al. v. AMC Entertainment 
Holdings, Inc., et al., Civil Action No. 1:15-cv-02181. On December 15, 
2015, the United States and the State of Connecticut filed a Complaint 
alleging that AMC Entertainment Holdings, Inc. proposed acquisition of 
SMH Theatres, Inc. movie theatres and related assets would violate 
section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final 
Judgment, filed at the same time as the Complaint, requires AMC 
Entertainment Holdings, Inc. to divest certain theatre assets.
    Copies of the Complaint, proposed Final Judgment, Hold Separate 
Stipulation and Order, and Competitive Impact Statement are available 
for inspection on the Antitrust Division's Web site at https://www.justice.gov/atr and at the Office of the Clerk of the United States 
District Court for the District of Columbia. Copies of these materials 
may be obtained from the Antitrust Division upon request and payment of 
the copying fee set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's Web site, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to David C. Kully, 
Chief, Litigation III Section, Antitrust Division, Department of 
Justice, 450 Fifth Street NW., Suite 4000, Washington, DC 20530 
(telephone: 202-305-9969).

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, Antitrust Division, 450 Fifth Street 
NW., Suite 4000, Washington, DC 20530, and STATE OF CONNECTICUT, 
Office of the Attorney General, 55 Elm Street, Hartford, CT 06106, 
Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS, INC., One AMC Way, 11500 
Ash Street, Leawood, KS 64105, and SMH THEATRES, INC., 12750 Merit 
Drive, Suite 800, Dallas, TX 75251, Defendants.

 Civil Action No.: 1:15-cv-02181
 Judge: Beryl A. Howell
 Filed: 12/15/2015

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, and the State of Connecticut, 
acting by and through its Office of the Attorney General, bring this 
civil antitrust action to prevent the proposed acquisition by AMC 
Entertainment Holdings, Inc.

[[Page 80800]]

(``AMC'') of all of the outstanding voting securities of SMH Theatres, 
Inc. (``Starplex Cinemas'').

I. NATURE OF ACTION

    1. AMC is a significant competitor to Starplex Cinemas in the 
exhibition of first-run, commercial movies in the area in and around 
East Windsor, New Jersey and in the area in and around Berlin, 
Connecticut. If AMC's acquisition of Starplex Cinemas is permitted to 
proceed, it would give AMC direct control of its most significant 
competitor in these markets. The acquisition likely would substantially 
lessen competition in the exhibition of first-run, commercial movies in 
each of these markets in violation of Section 7 of the Clayton Act, 15 
U.S.C. Sec.  18.

II. JURISDICTION AND VENUE

    2. This action is filed by the United States pursuant to Section 15 
of the Clayton Act, as amended, 15 U.S.C. Sec.  25, to obtain equitable 
relief and to prevent a violation of Section 7 of the Clayton Act, as 
amended, 15 U.S.C. Sec.  18.
    3. The State of Connecticut brings this action under Section 16 of 
the Clayton Act, 15 U.S.C. Sec.  26, to prevent the defendants from 
violating Section 7 of the Clayton Act, as amended, 15 U.S.C. Sec.  18. 
The State of Connecticut, by and through its Office of the Attorney 
General, brings this action as parens patriae on behalf of the 
citizens, general welfare, and economy of its state.
    4. The distribution and theatrical exhibition of first-run, 
commercial films is a commercial activity that substantially affects, 
and is in the flow of, interstate trade and commerce. Defendants' 
activities in purchasing equipment, services, and supplies as well as 
licensing films for exhibition substantially affect interstate 
commerce. The Court has jurisdiction over the subject matter of this 
action pursuant to 15 U.S.C. Sec.  25 and 28 U.S.C. Sec. Sec.  1331, 
1337(a), and 1345.
    5. Defendants consent to personal jurisdiction and venue in this 
district. Therefore, this Court has personal jurisdiction over each 
Defendant and venue is proper under 28 U.S.C. Sec.  1391(b) and (c). In 
addition, venue is proper under 15 U.S.C. Sec.  22 because one 
defendant operates theatres in this District; the other transacts 
business by attracting patrons from and advertising in this District.

III. DEFENDANTS AND THE PROPOSED ACQUISITION

    6. Defendant AMC is a Delaware corporation with its headquarters in 
Leawood, Kansas. AMC operates 349 theatres and 4,975 screens in 
locations throughout the United States. Measured by number of screens 
and box office revenue, AMC is the second-largest theatre circuit in 
the United States.
    7. Defendant Starplex Cinemas is a Texas corporation with its 
headquarters in Dallas, Texas. Starplex operates 33 movie theatres with 
a total of 346 screens in the United States, primarily located in small 
to midsize markets.
    8. On July 13, 2015, AMC and Starplex Cinemas executed a stock 
purchase agreement. Under the agreement, AMC will acquire all 
outstanding voting securities of Starplex Cinemas for approximately 
$172 million.

IV. BACKGROUND OF THE MOVIE THEATRE INDUSTRY

    9. Viewing movies in the theatre is a popular pastime. Over one 
billion movie tickets were sold in the United States in 2014, with 
total box office revenue reaching approximately $10 billion.
    10. Companies that operate movie theatres are called 
``exhibitors.'' Some exhibitors own a single theatre, whereas others 
own a circuit of theatres within one or more regions of the United 
States. AMC and Starplex Cinemas are exhibitors in the United States.
    11. Exhibitors set ticket prices for a theatre based on a number of 
factors, including the age and condition of the theatre, the number and 
type of amenities the theatre offers (such as the range of snacks, food 
and beverages offered, the size of its screens and quality of its sound 
systems, and whether it provides stadium and/or reserved seating), 
competitive pressures facing the theatre (such as the price of tickets 
at nearby theatres, the age and condition of those theatres, and the 
number and type of amenities they offer), and the population 
demographics and density surrounding the theatre.

V. RELEVANT MARKET

A. Product Market

    12. Movies are a unique form of entertainment. The experience of 
viewing a movie in a theatre is an inherently different experience from 
live entertainment (e.g., a stage production or attending a sporting 
event) or viewing a movie in the home (e.g., through streaming video, 
on a DVD, or via pay-per-view).
    13. Reflecting the significant differences of viewing a movie in a 
theatre, ticket prices for movies generally differ from prices for 
other forms of entertainment. For example, live entertainment is 
typically significantly more expensive than a movie ticket, whereas 
home viewing through streaming video, a DVD rental, or pay-per-view is 
usually significantly less expensive than viewing a movie in a theatre.
    14. Viewing a movie at home typically lacks several characteristics 
of viewing a movie in a theatre, including the size of the screen, the 
sophistication of the sound system, and the social experience of 
viewing a movie with other patrons. In addition, the most popular newly 
released or ``first-run'' movies are not available for home viewing at 
the time they come out in theatres.
    15. Movies are considered to be in their ``first-run'' during the 
four to five weeks following initial release in a given locality. If 
successful, a movie may be exhibited at other theatres after the first-
run as part of a second or subsequent run (often called a ``sub-run'' 
or ``second-run''). Moviegoers generally do not regard sub-run movies 
as an adequate substitute for first-run movies. Reflecting the 
significant difference between viewing a newly released, first-run 
movie and an older sub-run movie, tickets at theatres exhibiting first-
run movies usually cost significantly more than tickets at sub-run 
theatres.
    16. Art movies and foreign-language movies are also not reasonable 
substitutes for commercial, first-run movies. Art movies, which include 
documentaries, are sometimes referred to as independent films. Although 
art and foreign-language movies appeal to some viewers of commercial 
movies, art and foreign-language movies tend to have more narrow appeal 
and typically attract an older audience than commercial movies. 
Exhibitors consider the operation of theatres that exhibit art and 
foreign-language movies to be distinct from the operation of theatres 
that exhibit commercial movies.
    17. The relevant product market within which to assess the 
competitive effects of this acquisition is the exhibition of first-run, 
commercial movies. A hypothetical monopolist controlling the exhibition 
of all first-run, commercial movies would profitably impose at least a 
small but significant and non-transitory increase in ticket prices.

B. Geographic Markets

    18. Moviegoers typically are not willing to travel very far from 
their home to attend a movie. As a result, geographic markets for the 
exhibition of first-run, commercial movies are relatively local.

[[Page 80801]]

Area In and Around East Windsor, New Jersey

    19. AMC and Starplex Cinemas account for the majority of the first-
run, commercial movie tickets sold in and around East Windsor, New 
Jersey (``East Windsor''). The only theatres that predominantly show 
first-run commercial movies in the East Windsor area are the Starplex 
Town Center Plaza 10, the AMC MarketFair 10, and the AMC Hamilton 24. 
The Starplex theatre is located approximately 10 miles from each of the 
AMC theatres.
    20. Moviegoers who reside in East Windsor are unlikely to travel 
significant distances out of that area to attend a first-run, 
commercial movie. A small but significant increase in the price of 
tickets by a hypothetical monopolist of first-run, commercial movie 
theatres in East Windsor would likely not cause a sufficient number of 
moviegoers to travel out of that area to make the increase 
unprofitable. East Windsor constitutes a relevant geographic market in 
which to assess the competitive effects of this acquisition.

Area In and Around Berlin, Connecticut

    21. AMC and Starplex Cinemas account for the majority of the first-
run, commercial movie tickets sold in and around Berlin, Connecticut 
(``Berlin''). Within the Berlin area are the Starplex Berlin 12 and the 
AMC Plainville 20. These two theatres are located approximately 8 miles 
apart. Only three other theatres in the Berlin area also show first-
run, commercial movies.
    22. Moviegoers who reside in Berlin are unlikely to travel 
significant distances out of that area to attend a first-run, 
commercial movie. A small but significant increase in the price of 
tickets by a hypothetical monopolist of first-run, commercial movie 
theatres in Berlin would likely not cause a sufficient number of 
moviegoers to travel out of that area to make the increase 
unprofitable. Berlin constitutes a relevant geographic market in which 
to assess the competitive effects of this acquisition.

VI. COMPETITIVE EFFECTS

    23. Exhibitors compete to attract moviegoers to their theatres over 
the theatres of their rivals. They do that by competing on price, 
knowing that if they charge too much (or do not offer sufficient 
discounted tickets for matinees, seniors, students, or children) 
moviegoers will begin to frequent their rivals. Exhibitors also compete 
by seeking to license the first-run movies that are likely to attract 
the largest numbers of moviegoers. In addition, they compete over the 
quality of the viewing experience by offering moviegoers the most 
sophisticated sound systems, largest screens, best picture clarity, 
best seating (including stadium and reserved seating), and the broadest 
variety and highest quality snacks, food, and drinks at concession 
stands or caf[eacute]s in the lobby or served to moviegoers at their 
seats.
    24. AMC and Starplex Cinemas currently compete for moviegoers in 
the East Windsor and Berlin markets. These markets are concentrated, 
and in each market, AMC and Starplex Cinemas are the other's most 
significant competitor, given their close proximity. Their rivalry 
spurs each to improve the quality of its theatres and keeps ticket 
prices in check. Theatres operated by other exhibitors offer less 
attractive options for visitors to defendants' theatres because those 
theatres are located farther away or are smaller in size or poorer in 
quality.
    25. In the relevant markets at issue, the acquisition of Starplex 
Cinemas likely will result in a substantial lessening of competition. 
In the East Windsor and Berlin markets, the transaction will lead to 
significant increases in concentration and eliminate existing 
competition between AMC and Starplex Cinemas.
    26. Market concentration is often a useful indicator of the level 
of competitive vigor in a market and the likely competitive effects of 
a merger. The more concentrated a market, and the more a transaction 
would increase that concentration, the more likely it is that the 
transaction would result in reduced competition, harming consumers. 
Market concentration commonly is measured by the Herfindahl-Hirschman 
Index (``HHI''), as discussed in Appendix A. Markets in which the HHI 
exceeds 2,500 points are considered highly concentrated, and 
transactions that increase the HHI by more than 200 points in highly 
concentrated markets are presumed likely to enhance market power.
    27. In East Windsor, the proposed acquisition would give AMC 
control of all of the first-run, commercial movie theatres, with 34 out 
of 34 total screens and a 100% share of the $13 million annual box 
office revenues. The acquisition would yield a post-acquisition HHI of 
10,000, representing an increase of roughly 2,300 points.
    28. In Berlin, the proposed acquisition would give AMC control of 
three of the six first-run, commercial movie theatres, with 44 out of 
79 total screens and an approximate 68% share of the $11 million annual 
box office revenues. The acquisition would yield a post-acquisition HHI 
of approximately 5,260, representing an increase of roughly 2,280 
points.
    29. Today, were one of defendants' theatres to unilaterally 
increase ticket prices in East Windsor or Berlin, the exhibitor that 
increased price would likely suffer financially as a substantial number 
of its customers would patronize the other exhibitor. The acquisition 
would eliminate this pricing constraint. Thus, the acquisition is 
likely to lead to higher ticket prices for moviegoers, which could take 
the form of a higher adult evening ticket price or reduced discounting 
for matinees, children, seniors, or students.
    30. The proposed acquisition likely would also reduce competition 
between AMC and Starplex Cinemas over the quality of the viewing 
experience at their East Windsor or Berlin theatres. If no longer 
motivated to compete, AMC and Starplex Cinemas would have reduced 
incentives to maintain, upgrade, and renovate their theatres, to 
improve the theatres' amenities and services, or to license the most 
popular movies, thus reducing the quality of the viewing experience for 
moviegoers in East Windsor and Berlin.

VII. ENTRY

    31. Sufficient, timely entry that would deter or counteract the 
anticompetitive effects alleged above is unlikely. Exhibitors are 
reluctant to locate new first-run, commercial theatres near existing 
first-run, commercial theatres unless the population density, 
demographics, or the quality of existing theatres makes new entry 
viable. Over the next two years, entry of new first-run, commercial 
movie theatres in East Windsor or Berlin would be unlikely to defeat a 
price increase by the merged firm.

VIII. VIOLATION ALLEGED

    32. Plaintiffs hereby reincorporate paragraphs 1 through 28.
    33. The likely effect of the proposed transaction would be to 
substantially lessen competition in the relevant product and geographic 
markets in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    34. The transaction would likely have the following effects, among 
others: (a) the prices of tickets at first-run, commercial movie 
theatres in East Windsor and Berlin would likely increase to levels 
above those that would prevail absent the acquisition; and (b) the 
quality of first-run, commercial theatres and the viewing experience at 
those theatres would

[[Page 80802]]

likely decrease below levels that would prevail absent the acquisition.

IX. REQUESTED RELIEF

    35. Plaintiffs request: (a) adjudication that the proposed 
acquisition would violate Section 7 of the Clayton Act; (b) permanent 
injunctive relief to prevent the consummation of the proposed 
acquisition; (c) an award to each Plaintiff of its costs in this 
action; and (d) such other relief as is proper.

DATED: DECEMBER 15, 2015

FOR PLAINTIFF UNITED STATES OF AMERICA

William J. Baer (D.C. Bar #324723)
Assistant Attorney General for Antitrust

Renata B. Hesse (D.C. Bar #466107)
Deputy Assistant Attorney General

Patricia A. Brink
Director of Civil Enforcement

David C. Kully (D.C. Bar #448763)
Chief, Litigation III

Ethan C. Glass (D.D.C. Bar #MI0018)
Assistant Chief, Litigation III

Lisa A. Scanlon
Assistant Chief, Litigation III

Gregg I. Malawer (D.C. Bar #481685),

Miriam R. Vishio (D.C. Bar #482282), 
Trial Attorneys, Litigation III, U.S. Department of Justice, 
Antitrust Division, 450 5th Street, NW, Suite 4000, Washington, D.C. 
20530, Fax: (202) 514-7308, Telephone: Gregg Malawer (202) 616-5943, 
Email: gregg.malawer@usdoj.gov, Telephone: Miriam Vishio (202) 598-
8091, Email: miriam.vishio@usdoj.gov

DATED: DECEMBER 15, 2015

FOR PLAINTIFF STATE OF CONNECTICUT

GEORGE JEPSEN,
ATTORNEY GENERAL

By: Michael E. Cole,

Assistant Attorney General, Chief, Antitrust & Government Program 
Fraud, 55 Elm Street, P.O. Box 120, Hartford, CT 06141-120, 860-808-
5040, Email: Michael.cole@ct.gov

APPENDIX A

Herfindahl-Hirschman Index

    The term ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. The HHI is calculated by 
squaring the market share of each firm competing in the relevant market 
and then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of 30, 30, 20, and 20 percent, the 
HHI is 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI takes 
into account the relative size distribution of the firms in a market. 
It approaches zero when a market is occupied by a large number of firms 
of relatively equal size, and reaches its maximum of 10,000 points when 
a market is controlled by a single firm. The HHI increases both as the 
number of firms in the market decreases and as the disparity in size 
between those firms increases.
    Markets in which the HHI is between 1,500 and 2,500 points are 
considered to be moderately concentrated, and markets in which the HHI 
is in excess of 2,500 points are considered to be highly concentrated. 
See U.S. Department of Justice & Federal Trade Commission, Horizontal 
Merger Guidelines Sec.  5.3 (2010) (``Guidelines''). Transactions that 
increase the HHI by more than 200 points in highly concentrated markets 
presumptively raise antitrust concerns under the Guidelines. Id.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, Antitrust Division, 450 Fifth Street, 
NW., Suite 4000, Washington, D.C. 20530, and STATE OF CONNECTICUT, 
Office of the Attorney General, 55 Elm Street, Hartford, CT 06106, 
Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS, INC., One AMC Way, 11500 
Ash Street, Leawood, KS 64105, and SMH THEATRES, INC., 12750 Merit 
Drive, Suite 800, Dallas, TX 75251, Defendants.

Civil Action No.: 1:15-cv-02181
Judge: Beryl A. Howell
Filed: 12/15/2015

COMPETITIVE IMPACT STATEMENT

    Plaintiff, United States of America, pursuant to Section 2(b) of 
the Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney 
Act''), 15 U.S.C.Sec.  16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    On July 13, 2015, Defendant AMC Entertainment Holdings, Inc. 
(``AMC'') agreed to acquire all of the outstanding voting securities of 
SMH Theatres, Inc. (``Starplex Cinemas''). AMC and Starplex Cinemas are 
significant competitors in the exhibition of first-run, commercial 
movies in parts of New Jersey and Connecticut. Plaintiffs filed a civil 
antitrust complaint on December 15, 2015, seeking to enjoin the 
proposed acquisition and to obtain equitable relief. The Complaint 
alleges that the acquisition, if permitted to proceed, would give AMC 
direct control of its most significant competitor in the area in and 
around East Windsor, New Jersey and in the area in and around Berlin, 
Connecticut. The likely effect of this acquisition would be to 
substantially lessen competition in the exhibition of first-run, 
commercial movies in violation of Section 7 of the Clayton Act, 15 
U.S.C. Sec.  18.
    At the same time the Complaint was filed, Plaintiffs also filed a 
Hold Separate Stipulation and Order (``Hold Separate'') and a proposed 
Final Judgment, which are designed to eliminate the anticompetitive 
effects of the acquisition. Under the proposed Final Judgment, which is 
explained more fully below, AMC and Starplex Cinemas are required to 
divest one theatre located in New Jersey and one theatre located in 
Connecticut to acquirer(s) acceptable to the United States, in 
consultation with the State of Connecticut.
    Under the terms of the Hold Separate, Defendants will take all 
steps necessary to ensure that the two theatres to be divested are 
operated as competitively independent, economically viable, and ongoing 
business concerns, and that competition is maintained and not 
diminished during the pendency of the ordered divestitures.
    Plaintiffs and Defendants have stipulated that the proposed Final 
Judgment may be entered after compliance with the APPA. Entry of the 
proposed Final Judgment would terminate this action, except that the 
Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION

A. Defendants and the Proposed Transaction

    Defendant Starplex Cinemas is a Texas corporation with its 
headquarters in Dallas, Texas. Starplex operates 33 movie theatres with 
a total of 346 screens in 12 states throughout the United States, 
primarily located in small to midsize markets. Starplex earned domestic 
box office revenue of approximately $57 million in 2014.
    AMC is a Delaware corporation with its headquarters in Leawood, 
Kansas. It operates 349 theatres and 4,975 screens in locations 
primarily throughout the United States. Measured by number of screens 
and box office revenue, AMC is the second-largest theatre exhibitor in 
the United States and earned domestic box office revenues of 
approximately $1.8 billion in 2014.
    On July 13, 2015, AMC and Starplex Cinemas executed a stock 
purchase agreement under which AMC will acquire, for approximately $172 
million, all of the outstanding voting securities of Starplex Cinemas.
    The proposed transaction, as initially agreed to by AMC and 
Starplex Cinemas

[[Page 80803]]

on July 13, 2015, would lessen competition substantially as a result of 
AMC's acquisition of Starplex Cinemas. This acquisition is the subject 
of the Complaint and proposed Final Judgment filed by Plaintiffs on 
December 15, 2015.

B. The Competitive Effects of the Transaction on the Exhibition of 
First-Run, Commercial Movies

1. The Relevant Product and Geographic Markets

    The exhibition of first-run, commercial movies is a relevant 
product market under Section 7 of the Clayton Act. The experience of 
viewing a film in a theatre is an inherently different experience from 
live entertainment (e.g., a stage production or attending a sporting 
event), or viewing a movie in the home (e.g., through streaming video, 
on a DVD, or via pay-per-view).
    Reflecting the significant differences between viewing a movie in a 
theatre and other forms of entertainment, ticket prices for movies are 
generally very different from prices for other forms of entertainment. 
Live entertainment is typically significantly more expensive than a 
movie ticket, whereas renting a DVD or ordering a pay-per view movie 
for home viewing is usually significantly cheaper than viewing a movie 
in a theatre.
    Moviegoers generally do not regard theatres showing ``sub-run'' 
movies, art movies, or foreign language movies as adequate substitutes 
for commercial, first-run movies.
    The transaction substantially lessens competition in two relevant 
geographic markets: the area in and around East Windsor, New Jersey 
(``East Windsor'') and the area in and around Berlin, Connecticut 
(``Berlin'').

East Windsor

    The only theatres that predominantly show first-run commercial 
movies in the East Windsor area are the Starplex Town Center Plaza 10, 
the AMC MarketFair 10, and the AMC Hamilton 24. No other non-party 
theatres in this area predominantly show first-run, commercial movies.

Berlin

    Within the Berlin area are the Starplex Berlin 12 and the AMC 
Plainville 20. These two theatres are located approximately 8 miles 
apart. Three non-party theatres in this area also show first-run, 
commercial movies.
    The relevant markets in which to assess the competitive effects of 
this transaction are the first-run, commercial theatres in East Windsor 
and Berlin. A hypothetical monopolist controlling the exhibition of 
first-run, commercial movies in East Windsor and Berlin would 
profitably impose at least a small but significant and non-transitory 
increase in ticket prices.

2. Competitive Effects in the Relevant Markets

    Exhibitors that operate first-run, commercial theatres compete on 
multiple dimensions. Exhibitors compete on price, knowing that if they 
charge too much (or do not offer sufficient discounted tickets for 
matinees, seniors, students, or children), moviegoers will begin to 
frequent their rivals. Exhibitors also compete by seeking to license 
the first-run movies that are likely to attract the largest numbers of 
moviegoers. In addition, they compete over the quality of the viewing 
experience. They compete to offer the most sophisticated sound systems, 
largest screens, best picture clarity, best seating (including stadium 
and reserved seating), and the broadest range and highest quality 
snacks, food, and drinks at concession stands or caf[eacute]s in the 
lobby or served to moviegoers at their seats.
    AMC and Starplex Cinemas currently compete for moviegoers in East 
Windsor and Berlin. Each of these markets is concentrated, and AMC and 
Starplex Cinemas are each other's most significant competitor, given 
their close proximity. Their rivalry spurs each to improve the quality 
of its theatres and keeps ticket prices in check.
    In East Windsor and Berlin, the acquisition by AMC of Starplex 
Cinemas' theatres likely will result in a substantial lessening of 
competition. The transaction will lead to significant increases in 
concentration and eliminate existing competition between AMC and 
Starplex Cinemas.
    In East Windsor, the proposed acquisition would give the newly 
merged entity control of all of the first-run, commercial theatres, 
with 34 out of 34 total screens and a 100% share of annual box office 
revenues totaling approximately $13 million. Using a measure of market 
concentration called the Herfindahl-Hirschman Index (``HHI''), as 
discussed in Appendix A of the Complaint, the acquisition would yield a 
post-acquisition HHI of 10,000, representing an increase of roughly 
2,300 points.
    In Berlin, the proposed acquisition would give the newly-merged 
entity control of three of the six first-run, commercial theatres, with 
44 out of 79 total screens and an approximate 68% share of annual box 
office revenues totaling approximately $11 million. The acquisition 
would yield a post-acquisition HHI of approximately 5,260, representing 
an increase of roughly 2,280 points.
    In East Windsor and Berlin today, were one of Defendants' theatres 
to increase ticket prices unilaterally, the exhibitor that increased 
price would likely suffer financially as a substantial number of its 
customers would patronize the other exhibitor's theatre. Other theatres 
are smaller than and/or farther from the parties' theatres and unlikely 
to offer enough of a competitive constraint to prevent such a price 
increase. After the acquisition, AMC would recapture such losses, 
making price increases more profitable than they would have been pre-
acquisition. The acquisition is, therefore, likely to lead to higher 
ticket prices for moviegoers, which could take the form of a higher 
adult evening ticket price or reduced discounting for matinees, 
children, seniors, and students.
    Likewise, the proposed transaction would eliminate competition 
between AMC and Starplex Cinemas over the quality of the viewing 
experience at their theatres in East Windsor and Berlin. If no longer 
required to compete, AMC and Starplex Cinemas would have a reduced 
incentive to maintain, upgrade, and renovate their theatres, to improve 
the theatres' amenities and services, and to license the most popular 
movies, thus reducing the quality of the viewing experience for a 
moviegoer.
    The entry of a first-run, commercial theatre sufficient to deter or 
counteract an increase in movie ticket prices or a decline in theatre 
quality is unlikely in either East Windsor or Berlin. Exhibitors are 
reluctant to locate new first-run, commercial theatres near existing 
first-run, commercial theatres, unless the population density, 
demographics, or the quality of existing theatres makes new entry 
viable. Over the next two years, entry of any new first-run, commercial 
movie theatres in East Windsor and Berlin would be unlikely to defeat a 
price increase by the merged firm.
    For all of these reasons, the proposed transaction would lessen 
competition substantially in the exhibition of first-run, commercial 
movies in the East Windsor and Berlin markets, eliminate actual and 
potential competition between AMC and Starplex Cinemas, and likely 
result in increased ticket prices and lower quality theatres in those 
markets. The proposed transaction therefore violates Section 7 of the 
Clayton Act.

[[Page 80804]]

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestiture requirement of the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisitions in each 
relevant geographic market, establishing new, independent, and 
economically viable competitors. The proposed Final Judgment requires 
Defendants within thirty (30) calendar days after the filing of the 
Complaint, or five (5) days after the notice of the entry of the Final 
Judgment by the Court, whichever is later, to divest as viable, ongoing 
businesses one theatre in each of the relevant markets.
    The theatres must be divested in such a way as to satisfy 
Plaintiffs that they can and will be operated by the purchaser as 
viable, ongoing businesses that can compete effectively as first-run, 
commercial theatres. To that end, the proposed Final Judgment provides 
the acquirer(s) of the theatres with an option to enter into a 
transitional supply agreement with Defendants of up to 120 days in 
length, with the possibility of one or more extensions not to exceed 
six months in total, for the supply of any goods, services, support, 
including software service and support, and reasonable use of the name 
AMC, the name Starplex, and any registered service marks of AMC or 
Starplex, for use in operating those theatres during the period of 
transition. This ensures the acquirer(s) of the theatres can operate 
without interruption while long-term supply agreements are arranged and 
the theatres rebranded. Without the option to enter into a transitional 
supply agreement, the acquirer(s) might find itself temporarily without 
provisions, including concessions, necessary to operate the theatres.
    Until the divestitures take place, AMC and Starplex Cinemas must 
maintain the sales and marketing of the theatres, and maintain the 
theatres in operable condition at current capacity configurations. In 
addition, AMC and Starplex Cinemas must not transfer or reassign to 
other areas within the company their employees with primary 
responsibility for the operation of the theatres, except for transfer 
bids initiated by employees pursuant to Defendants' regular, 
established job-posting policies. In the event that Defendants do not 
accomplish the divestitures within the periods prescribed in the 
proposed Final Judgment, the Final Judgment provides that the Court 
will appoint a trustee selected by the United States to effect the 
divestitures.
    If Defendants are unable to effect any of the divestitures required 
herein due to its inability to obtain the consent of the landlord from 
whom a theatre is leased, Section VI.A of the proposed Final Judgment 
requires them to divest alternative theatre assets that compete 
effectively with the theatres for which the landlord consent was not 
obtained. These provisions will insure that any failure by Defendants 
to obtain landlord consent does not thwart the relief obtained in the 
proposed Final Judgment.
    The proposed Final Judgment also prohibits Defendants, without 
providing at least thirty (30) days notice to the United States 
Department of Justice, from acquiring any other theatres in the 
following counties: Hartford County, Connecticut and Mercer County, New 
Jersey. These counties correspond to the relevant geographic markets in 
this case. Such acquisitions could raise competitive concerns but might 
be too small to be reported under the Hart-Scott-Rodino (``HSR'') 
premerger notification statute.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects of AMC's acquisition of Starplex 
Cinemas.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
Sec.  16(a), the proposed Final Judgment has no prima facie effect in 
any subsequent private lawsuit that may be brought against Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    Plaintiffs and Defendants have stipulated that the proposed Final 
Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's internet Web site and, under certain 
circumstances, published in the Federal Register.
    Written comments should be submitted to: David C. Kully, Chief, 
Litigation III, Antitrust Division, United States Department of 
Justice, 450 5th Street NW., Suite 4000, Washington, DC 20530.

The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    Plaintiffs considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits against Defendants. Plaintiffs 
could have continued the litigation and sought preliminary and 
permanent injunctions against AMC's acquisition of Starplex Cinemas. 
Plaintiffs are satisfied, however, that the divestiture of assets 
described in the proposed Final Judgment will preserve competition for 
the exhibition of first-run, commercial movies in East Windsor and 
Berlin. Thus, the proposed Final Judgment would achieve all or 
substantially all of the relief Plaintiffs would have obtained through 
litigation, but avoids the time, expense, and uncertainty of a full 
trial on the merits of the Complaint.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1). In

[[Page 80805]]

making that determination, the Court, in accordance with the statute as 
amended in 2004, is required to consider:
    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon theadequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

15 U.S.C. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the Court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (DC Cir. 1995); see generally 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) 
(assessing public interest standard under the Tunney Act); United 
States v, U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
explaining that the ``court's inquiry is limited'' in Tunney Act 
settlements); United States v. InBev N.V/S.A., No. 08-1965 (JR), 2009-2 
Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment is 
limited and only inquires ``into whether the government's determination 
that the proposed remedies will cure the antitrust violations alleged 
in the complaint was reasonable, and whether the mechanism to enforce 
the final judgment are clear and manageable.'') \1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

[t]he balancing of competing social and political interests affected by 
a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's role 
in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to the 
decree. The court is required to determine not whether a particular 
decree is the one that will best serve society, but whether the 
settlement is ``within the reaches of the public interest.'' More 
elaborate requirements might undermine the effectiveness of antitrust 
enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting 
that a court should not reject the proposed remedies because it 
believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the 
need for courts to be ``deferential to the government's predictions as 
to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that 
the court should grant due respect to the United State's prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.''' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461)); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public 
interest' is not to be measured by comparing the violations alleged in 
the complaint against those the court believes could have, or even 
should have, been alleged''). Because the ``court's authority to review 
the decree depends entirely on the government's exercising its 
prosecutorial discretion by bringing a case in the first place,'' it 
follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As this Court confirmed in SBC Communications, courts 
``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to

[[Page 80806]]

make a mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 
15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 76 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the Court, with the 
recognition that the Court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11. A court can make its public interest 
determination based on the competitive impact statement and response to 
public comments alone. U.S. Airways, 38 F. Supp. 3d at 76.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

VIII. DETERMINATIVE DOCUMENTS

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: December 15, 2015

 Respectfully submitted,

GREGG I. MALAWER (D.C. Bar #481685),
MIRIAM R. VISHIO (D.C. Bar # 482282),

U.S. Department of Justice, Antitrust Division, 450 5th Street, NW, 
Suite 4000, Washington, DC 20530, Phone: Gregg Malawer (202) 616-
5943, Phone: Miriam Vishio (202) 598-8091 Fax: (202) 514-7308, E-
mail: gregg.malawer@usdoj.gov, E-mail: miriam.vishio@usdoj.gov, 
Attorneys for Plaintiff the United States

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, and STATE OF CONNECTICUT, Plaintiffs, v. 
AMC ENTERTAINMENT HOLDINGS, INC. and SMH THEATRES, INC., Defendants.

 Civil Action No.: 1:15-cv-02181
Judge: Beryl A. Howell
Filed: 12/15/2015

[PROPOSED] FINAL JUDGMENT

    WHEREAS, Plaintiffs United States of America and the State of 
Connecticut filed their Complaint on December 15, 2015, the Plaintiffs 
and Defendants, AMC Entertainment Holdings, Inc. (``AMC''), and SMH 
Theatres, Inc., (``Starplex Cinemas''), by their respective attorneys, 
have consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by the Defendants to 
assure that competition is not substantially lessened;
    AND WHEREAS, Plaintiffs require Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    AND WHEREAS, Defendants have represented to Plaintiffs that the 
divestitures required below can and will be made and that Defendants 
will later raise no claim of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED AND DECREED:

I. JURISDICTION

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
which Defendants divest the Divestiture Assets.
    B. ``AMC'' means AMC Entertainment Holdings, Inc., a Delaware 
corporation with its headquarters in Leawood, Kansas, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Starplex Cinemas'' means Starplex Cinemas, Inc., a Texas 
Corporation with its headquarters in Dallas, Texas, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``Divestiture Assets'' means the following theatre assets:

------------------------------------------------------------------------
                Theatre                              Address
------------------------------------------------------------------------
1. Starplex Town Center Plaza 10.......  319 Route 130 North, East
                                          Windsor, NJ 08520.
2. Starplex Berlin 12..................  19 Frontage Rd, Berlin, CT
                                          06037.
------------------------------------------------------------------------

    The term ``Divestiture Assets'' also includes:
    1. All tangible assets that comprise the business of operating 
theatres that exhibit first-run, commercial movies, including, but not 
limited to real property and improvements, research and development 
activities, all equipment, fixed assets, and fixtures, personal 
property, inventory, office furniture, materials, supplies, and other 
tangible property and all assets used in connection with the 
Divestiture Assets; all licenses, permits, and authorizations issued by 
any governmental organization relating to the Divestiture Assets; all 
contracts (including management contracts), teaming

[[Page 80807]]

arrangements, agreements, leases, commitments, certifications, and 
understandings relating to the Divestiture Assets, including supply 
agreements (provided however, that supply agreements that apply to all 
of each Defendant's theatres may be excluded from the Divestiture 
Assets, subject to the transitional agreement provisions specified in 
Section IV (E)); all customer lists (including loyalty club data at the 
option of the Acquirer(s), copies of which may be retained by 
Defendants at their option), contracts, accounts, and credit records 
relating to the Divestiture Assets; all repair and performance records 
and all other records relating to the Divestiture Assets; and
    2. All intangible assets relating to the operation of the 
Divestiture Assets, including, but not limited to all patents, licenses 
and sublicenses, intellectual property, copyrights, trademarks, trade 
names, service marks, service names, (provided however, that the name 
Starplex, and any registered service marks of Starplex may be excluded 
from the Divestiture Assets, subject to the transitional agreement 
provisions specified in Section IV(E)), technical information, computer 
software and related documentation (provided however, that Defendants' 
proprietary software may be excluded from the Divestiture Assets, 
subject to the transitional agreement provisions specified in Section 
IV(E)), know-how and trade secrets, drawings, blueprints, designs, 
design protocols, specifications for materials, specifications for 
parts and devices, safety procedures for the handling of materials and 
substances, all research data concerning historic and current research 
and development, quality assurance and control procedures, design tools 
and simulation capability, all manuals and technical information 
Starplex Cinemas provides to their own employees, customers, suppliers, 
agents, or licensees (except for the employee manuals that Starplex 
provides to all its employees), and all research data concerning 
historic and current research and development.
    E. ``Landlord Consent'' means any contractual approval or consent 
that the landlord or owner of one or more of the Divestiture Assets, or 
of the property on which one or more of the Divestiture Assets is 
situated, must grant prior to the transfer of one of the Divestiture 
Assets to an Acquirer.

III. APPLICABILITY

    A. This Final Judgment applies to AMC and Starplex Cinemas, as 
defined above, and all other persons in active concert or participation 
with any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.
    B. If, prior to complying with Sections IV and V of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the Acquirer(s) of the assets divested pursuant to this 
Final Judgment.

IV. DIVESTITURES

    A. Defendants are ordered and directed, within thirty (30) calendar 
days after the filing of the Complaint in this matter to divest the 
Divestiture Assets in a manner consistent with this Final Judgment to 
one or more Acquirer(s) acceptable to the United States in its sole 
discretion (after consultation with the State of Connecticut, as 
appropriate). The United States, in its sole discretion, may agree to 
one or more extensions of this time period, not to exceed thirty (30) 
calendar days in total, and shall notify the Court in such 
circumstances. Defendants agree to use their best efforts to divest the 
Divestiture Assets as expeditiously as possible.
    B. In accomplishing the divestitures ordered by this Final 
Judgment, Defendants promptly shall make known, by usual and customary 
means, the availability of the Divestiture Assets. Defendants shall 
inform any person making an inquiry regarding a possible purchase of 
the Divestiture Assets that they are being divested pursuant to this 
Final Judgment and provide that person with a copy of this Final 
Judgment. Defendants shall offer to furnish to all prospective 
Acquirers, subject to customary confidentiality assurances, all 
information and documents relating to the Divestiture Assets 
customarily provided in a due diligence process except such information 
or documents subject to the attorney-client privilege or work-product 
doctrine. Defendants shall make available such information to the 
Plaintiffs at the same time that such information is made available to 
any other person.
    C. Defendants shall provide the Acquirer(s) and the United States 
information relating to the personnel involved in the operation and 
management of the applicable Divestiture Assets to enable the 
Acquirer(s) to make offers of employment. Defendants shall not 
interfere with any negotiations by the Acquirer(s) to employ or 
contract with any employee of any Defendant whose primary 
responsibility relates to the operation or management of the applicable 
Divestiture Assets being sold by the Acquirer(s).
    D. Defendants shall permit prospective Acquirer(s) of the 
Divestiture Assets to have reasonable access to personnel and to make 
inspections of the physical facilities of the Divestiture Assets; 
access to any and all environmental, zoning, and other permit documents 
and information; and access to any and all financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process.
    E. In connection with the divestiture of the Divestiture Assets 
pursuant to Section IV, or by a trustee appointed pursuant to Section 
V, of this Final Judgment, at the option of the Acquirer(s), Defendants 
shall enter into a transitional supply, service, support, and use 
agreement (``transitional agreement''), of up to 120 days in length, 
for the supply of any goods, services, support, including software 
service and support, and reasonable use of the name AMC, the name 
Starplex, and any registered service marks of AMC or Starplex, that the 
Acquirer(s) request for the operation of the Divestiture Assets during 
the period covered by the transitional agreement. At the request of the 
Acquirer(s), the United States in its sole discretion (after 
consultation with the State of Connecticut, as appropriate), may agree 
to one or more extensions of this time period not to exceed six (6) 
months in total. The terms and conditions of the transitional agreement 
must be acceptable to the United States in its sole discretion (after 
consultation with the State of Connecticut, as appropriate). The 
transitional agreement shall be deemed incorporated into this Final 
Judgment and a failure by Defendants to comply with any of the terms or 
conditions of the transitional agreement shall constitute a failure to 
comply with this Final Judgment.
    F. Defendants shall warrant to the Acquirer(s) of the Divestiture 
Assets that each asset will be operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestitures of the Divestiture Assets.
    H. Defendants shall warrant to the Acquirer(s) that there are no 
material defects in the environmental, zoning, or other permits 
pertaining to the operation of the Divestiture Assets. Following the 
sale of the Divestiture Assets, Defendants will not undertake, directly 
or indirectly, any challenges to the environmental, zoning, or other

[[Page 80808]]

permits relating to the operation of the Divestiture Assets.
    I. Unless the United States otherwise consents in writing, the 
divestitures made pursuant to Section IV, and/or by a trustee appointed 
pursuant to Section V of this Final Judgment, shall include the entire 
Divestiture Assets and shall be accomplished in such a way as to 
satisfy the United States, in its sole discretion (after consultation 
with the State of Connecticut, as appropriate) that the Divestiture 
Assets can and will be used by the Acquirer(s) as part of a viable, 
ongoing business of operating theatres that exhibit first-run, 
commercial movies. Divestiture of the Divestiture Assets may be made to 
one or more Acquirers, provided that in each instance it is 
demonstrated to the sole satisfaction of the United States (after 
consultation with the State of Connecticut, as appropriate) that the 
Divestiture Assets will remain viable and the divestiture of such 
assets will remedy the competitive harm alleged in the Complaint. The 
divestitures, whether pursuant to Section IV or Section V of this Final 
Judgment,
    (1) shall be made to Acquirers that, in the United States' sole 
judgment (after consultation with the State of Connecticut, as 
appropriate) have the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the business of theatres exhibiting first-run, 
commercial movies; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion (after consultation with the State of Connecticut, 
as appropriate) that none of the terms of any agreement between 
Acquirers and Defendants gives Defendants the ability unreasonably to 
raise the Acquirers' costs, to lower the Acquirers' efficiency, or 
otherwise to interfere in the ability of any Acquirer to compete 
effectively.

V. APPOINTMENT OF TRUSTEE

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in Section IV(A), Defendants shall notify the 
United States of that fact in writing, specifically identifying the 
Divestiture Assets that have not been divested. Upon application of the 
United States, the Court shall appoint a trustee selected by the United 
States and approved by the Court to effect the divestitures of the 
Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestitures to Acquirer(s) acceptable to the United States (after 
consultation with the State of Connecticut, as appropriate) at such 
price and on such terms as are then obtainable upon reasonable effort 
by the trustee, subject to the provisions of Sections IV, V, VI, and 
VII of this Final Judgment, and shall have such other powers as this 
Court deems appropriate. Subject to Section V(D) of this Final 
Judgment, the trustee may hire at the cost and expense of Defendants 
any investment bankers, attorneys, or other agents, who shall be solely 
accountable to the trustee and reasonably necessary in the trustee's 
judgment to assist in the divestiture(s). Any such investment bankers, 
attorneys, or other agents shall serve on such terms and conditions as 
the United States approves, including confidentiality requirements and 
conflict of interest certifications.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
Defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VII.
    D. The trustee shall serve at the cost and expense of Defendants 
pursuant to a written agreement, on such terms and conditions as the 
United States approves, including confidentiality requirements and 
conflict of interest certifications. The trustee shall account for all 
monies derived from the sale of the applicable Divestiture Assets and 
all costs and expenses so incurred. After approval by the Court of the 
trustee's accounting, including fees for its services yet unpaid and 
those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to Defendants and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable in light of the 
value of the Divestiture Assets subject to sale by the trustee and 
based on a fee arrangement providing the trustee with an incentive 
based on the price and terms of the divestitures and the speed with 
which they are accomplished, but timeliness is paramount. If the 
trustee and Defendants are unable to reach agreement on the trustee's 
or any agents' or consultants' compensation or other terms and 
conditions of engagement within 14 calendar days of appointment of the 
trustee, the United States may, in its sole discretion (after 
consultation with the State of Connecticut, as appropriate), take 
appropriate action, including making a recommendation to the Court. The 
trustee shall, within three (3) business days of hiring any other 
professionals or agents, provide written notice of such hiring and the 
rate of compensation to Defendants and the United States.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestitures. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the assets and business to be divested, and 
Defendants shall develop financial and other information relevant to 
such assets and business as the trustee may reasonably request, subject 
to reasonable protection for trade secret or other confidential 
research, development, or commercial information or any applicable 
privileges. Defendants shall take no action to interfere with or to 
impede the trustee's accomplishment of the divestitures.
    F. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestitures ordered under this Final Judgment. To the 
extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The trustee shall maintain full records 
of all efforts made to divest the Divestiture Assets.
    G. If the trustee has not accomplished the divestitures ordered 
under this Final Judgment within six (6) months after its appointment, 
the trustee shall promptly file with the Court a report setting forth 
(1) the trustee's efforts to accomplish the required divestitures, (2) 
the reasons, in the trustee's judgment, why the required divestitures 
have not been accomplished, and (3) the trustee's recommendations. To 
the extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it

[[Page 80809]]

shall deem appropriate to carry out the purpose of the Final Judgment, 
which may, if necessary, include extending the trust and the term of 
the trustee's appointment by a period requested by the United States.
    H. If the United States determines that the trustee has ceased to 
act or failed to act diligently or in a reasonably cost-effective 
manner, it may recommend the Court appoint a substitute trustee.

VI. LANDLORD CONSENT

    A. If Defendants are unable to effect any of the divestitures 
required herein due to the inability to obtain the Landlord Consent for 
any of the Divestiture Assets, Defendants shall divest alternative 
theatre assets that compete effectively with the theatre or theatres 
for which the Landlord Consent was not obtained. The United States 
shall, in its sole discretion (after consultation with the State of 
Connecticut, as appropriate) determine whether such theatre assets 
compete effectively with the theatres for which Landlord Consent was 
not obtained.
    B. Within five (5) business days following a determination that 
Landlord Consent cannot be obtained for any of the Divestiture Assets, 
Defendants shall notify the United States, and Defendants shall propose 
an alternative divestiture pursuant to Section VI(A). The United States 
(after consultation with the State of Connecticut, as appropriate) 
shall have then ten (10) business days in which to determine whether 
such theatre assets are a suitable alternative pursuant to Section 
VI(A). If Defendants' selection is deemed not to be a suitable 
alternative, the United States shall in its sole discretion (after 
consultation with the State of Connecticut, as appropriate) select 
alternative theatre assets to be divested from among those theatre(s) 
that the United States has determined, in its sole discretion, compete 
effectively with the theatre(s) for which Landlord Consent was not 
obtained.
    C. If a trustee is responsible for effecting divestiture of the 
Divestiture Assets, it shall notify the United States and Defendants 
within five (5) business days following a determination that Landlord 
Consent cannot be obtained for one or more of the Divestiture Assets. 
Defendants shall thereafter have five (5) business days to propose an 
alternative divestiture pursuant to Section VI(A). The United States 
(after consultation with the State of Connecticut, as appropriate) 
shall then have ten (10) business days to determine whether the 
proposed theatre assets are a suitable competitive alternative pursuant 
to Section VI(A). If Defendants' selection is deemed not to be a 
suitable competitive alternative, the United States shall in its sole 
discretion (after consultation with the State of Connecticut, as 
appropriate) select alternative theatre assets to be divested from 
among those theatre(s) that the United States has determined, in its 
sole discretion, compete effectively with the theatre(s) for which 
Landlord Consent was not obtained.

VII. NOTICE OF PROPOSED DIVESTITURES

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the trustee, whoever is then 
responsible for effecting the divestitures required herein, shall 
notify the United States and, as appropriate, the State of Connecticut, 
of any proposed divestitures required by Sections IV, V, or VI of this 
Final Judgment. If the trustee is responsible, it shall similarly 
notify Defendants. The notice shall set forth the details of the 
proposed divestitures and list the name, address, and telephone number 
of each person not previously identified who offered or expressed an 
interest in or desire to acquire any ownership interest in the 
Divestiture Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States, in its sole discretion (after 
consultation with the State of Connecticut, as appropriate) may request 
from Defendants, the proposed Acquirer(s), any other third party, or 
the trustee, if applicable, additional information concerning the 
proposed divestitures, the proposed Acquirer(s), and any other 
potential Acquirer(s). Defendants and the trustee shall furnish any 
additional information requested to the United States within fifteen 
(15) calendar days of receipt of the request, unless the parties 
otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer(s), any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants, 
and the trustee, if there is one, stating whether it objects to the 
proposed divestitures. If the United States provides written notice 
that it does not object, the divestitures may be consummated, subject 
only to the Defendants' limited right to object to the sale under 
Section V(C) of this Final Judgment.
    Absent written notice that the United States does not object to the 
proposed Acquirer(s) or upon objection by the United States, a 
divestiture proposed under Section IV or Section V shall not be 
consummated. Upon objection by Defendants under Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VIII. FINANCING

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or V of this Final Judgment.

IX. HOLD SEPARATE

    Until the divestitures required by this Final Judgment have been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestitures 
ordered by this Court.

X. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been completed under Sections IV, V, or VI, 
Defendants shall deliver to the United States an affidavit as to the 
fact and manner of its compliance with Sections IV, V, or VI of this 
Final Judgment. Each such affidavit shall include the name, address, 
and telephone number of each person who, during the preceding thirty 
(30) calendar days, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person 
during that period. Each such affidavit shall also include a 
description of the efforts Defendants have taken to solicit buyers for 
and complete the sale of the Divestiture Assets, and to provide 
required information to prospective Acquirers, including the 
limitations, if any, on such information. Assuming the information set 
forth in the affidavit is true and complete, any objection by the 
United States to information provided by Defendants, including 
limitations on information, shall be made within fourteen (14) calendar 
days of receipt of each such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions taken and all 
steps implemented on an

[[Page 80810]]

ongoing basis to comply with Section IX of this Final Judgment. 
Defendants shall deliver to the United States an affidavit describing 
any changes to the efforts and actions outlined in their earlier 
affidavits filed pursuant to this section within fifteen (15) calendar 
days after the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestitures have been completed.

XI. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment or of any related orders such as any Hold Separate 
Stipulation and Order, or of determining whether the Final Judgment 
should be modified or vacated, and subject to any legally recognized 
privilege, from time to time authorized representatives of the United 
States Department of Justice, including consultants and other persons 
retained by the United States, shall, upon written request of an 
authorized representative of the Assistant Attorney General in charge 
of the Antitrust Division, and on reasonable notice to Defendants, be 
permitted:
    (1) access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    (2) to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, or an authorized representative of the State of Connecticut, as 
appropriate, except in the course of legal proceedings to which the 
United States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and Defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give Defendants ten (10) calendar days notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XII. NO REACQUISITION

    Defendants may not reacquire any part of the Divestiture Assets 
during the term of this Final Judgment.

XIII. RETENTION OF JURISDICTION

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XV. PUBLIC INTEREST DETERMINATION

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date: __________, 2015

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16

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United States District Judge

[FR Doc. 2015-32629 Filed 12-24-15; 8:45 am]
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