Cineworld CEO receives six-month suspended jail term for refusing to supply films to competitors
Cineworld CEO receives six-month suspended jail term for refusing to supply films to competitors
Mooky Greidinger and the Forum Film company he owns were convicted in a plea deal for denying their competitors films
A six-month suspended jail term and a fine of NIS 750,000 (approximately $220,000) was the sentence imposed on Sunday by the District Court judge in Lod, Dr. Ami Kobo, on Moshe (Mooky) Greidinger and the film distribution company he owns Forum Film. Greidinger will pay a fine of around $30,000 and Forum Film will pay $190,000. The sentence was given following the conviction of Greidinger and his company in a plea agreement.
In 2010, as part of a merger between Forum Film and Albert D. Matalon, the Authority imposed a condition on Forum Film according to which the company would also have to supply films to competing cinemas. However, as stated in the indictment and as stated in the judgment, Forum Film violated this condition when it refused to supply Lev Tel Aviv cinema, located at Dizengoff Center, films that it was obligated to supply, adding up to over eight different cases in the years 2015-2019.
The sentence states that "it must be taken into account that (...) the offenses were committed systematically and that there were eight violations of the terms of the merger, while it was possible at any stage to stop committing the violations, and the defendant was able to monitor and prevent the continuation of the violations. The defendant's role is pivotal due to his high rank and being the de facto owner of Forum Film, as the accuser claimed." However, the judge noted that the share of the company through its employees who refused to share the films, was greater.
Forum Film holds the exclusive distribution rights for four of the six major studios in the United States (Sony, 21st Century Fox, Walt Disney and Paramount). The parent company of Forum Film (Cineworld), of which Greidinger is the CEO, also owns the Rav Chen and Yes Planet chains.
The court ruled that it was a blatant and systematic violation of the terms of the merger, which caused damage to Lev Cinema and consumers. However, the court referred to the significant financial difficulties that the Cineworld company has recently suffered following the Covid epidemic, and that the imposition of heavy fines could harm the defendants even more. Finally, the court imposed the aforementioned penalties.
The case was investigated by the Investigations Department of the Competition Authority. The Authority was represented by Attorney Sarit Avniel.
During the court hearing in June, Greidinger revealed the current state of Cineworld. “We were an unprecedented success story. I don’t think there are many Israeli companies that reached a status similar to the world’s second largest cinema chain. But two-and-a-half years ago our life's work collapsed. Over the past two-and-a-half years, because of Covid-19, I’ve been fighting every day to save what we have built. I hope we succeed but it isn’t certain. The company’s debt grow because of the pandemic and our share price dropped by 93%.”
Greidinger’s grandfather started the family cinema business back in 1930 when he acquired a theater in Haifa. He would expand with an additional cinema in Tel aviv and in 1967 the family’s Forum Film distribution company signed a deal with Disney. Mooky joined the family business in 1976 and turned the local chain into a global empire. In 1997 he began setting up cinema chains in eastern Europe, initially in Hungary and then in Poland, Romania, and the Czech Republic. In 2014 he merged his company with UK-based Cineworld, becoming the largest shareholder of the merged company. In 2017, Cineworld announced it was acquiring Regal Entertainment Group for $3.6 billion, giving it more than 9,500 screens in 10 countries and making it the second largest chain in the world. In 2020, Cineworld was on course to buy Canada's Cineplex Entertainment for $1.65 billion and become the world's largest cinema chain ahead of AMC Theaters. However, the outbreak of Covid-19 changed everything and Cineworld announced it was abandoning the deal in June of that year.
Cineworld filed for Chapter 11 in September and received approval from the U.S. Bankruptcy Court for the Southern District of Texas for relief.
“The judgment is not expected to have any impact on the continued operations of Forum Film Ltd, Cineworld Group plc or Mooky Greidinger’s position as CEO of Cineworld Group,” Cineworld said in a statement.
