(CN) - AMC Entertainment Holdings agreed Tuesday to shed movie theaters in Connecticut and New Jersey to proceed with a $172 million acquisition of Starplex Cinemas.
Regulators warned that the AMC and Starplex Cinemas merger would likely reduce price competition, as well as the overall quality of the movie-viewing experience, since the companies are each other's most significant competitor in Berlin, Conn., and East Windsor, N.J.
The Justice Department and the state of Connecticut filed their federal antitrust action in Washington, D.C., simultaneously with the proposed settlement.
AMC's acquisition would give it control of 34 out of 34 movie screens in the East Windsor area, according to the complaint.
That also comes with 100 percent of the $13 million in box-office revenues. In Berlin, Conn., meanwhile AMC would control of 44 out of 79 total movie screens and 68 percent of the $11 million in box office revenues.
"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 lawsuit states. "The acquisition would eliminate this pricing constraint."
Under the terms of the proposed consent decree, the Starplex Town Center Plaza 10 in East Windsor and the Starplex Berlin 12 in Berlin must be divested to a buyer or buyers approved by the government within 30 days.
"Consumers have benefitted from the competition on price and on quality of the viewing experience between AMC's and Starplex Cinemas' theatres in Berlin, Connecticut, and East Windsor, New Jersey," Assistant Attorney General Bill Baer of said in a press release. "The divestiture of two theatres in those areas ensures that movie theater competition is preserved."
Delaware-based AMC operates 349 theaters with a total of 4,975 screens in locations primarily throughout the United States. Its U.S. box office revenues were approximately $1.8 billion in 2014.
Dallas-based Starplex Cinemas owns and operates 33 movie theaters with a total of 346 screens in 12 states. Its U.S. box office revenues were approximately $57 million in 2014.
Connecticut Attorney General Jepsen noted that competition fortifies the marketplace and helps consumers "find the best quality, prices and services."
"As attorney general, it is my responsibility to help ensure a fair and competitive marketplace, and I'm pleased to partner with our law enforcement colleagues at the DOJ in that effort," Jepsen said. "This settlement will help to maintain a competitive market and the best-possible service for Connecticut consumers who frequent first-run movie theaters in Berlin and its surrounding towns."
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