Online video-on-demand (VOD) company Movielink is not a hindrance to competition in the home-video industry, the U.S. Department of Justice (DOJ) has ruled.
LOS ANGELES -- Online video-on-demand (VOD) company Movielink is not a hindrance to competition in the home-video industry, the U.S. Department of Justice (DOJ) has ruled.
Since Movielink was formed in 2001 as a joint venture between MGM, Paramount, Sony, Universal and Warner Bros., the DOJ has been exploring whether the company could be reducing competition. The antitrust division of the DOJ officially closed its investigation at the end of May; the decision was made public June 4.
In a statement, the antitrust division says that its "substantial investigation of Movielink does not indicate that the formation of this joint venture by five of the major movie studios harmed competition of consumers of movies."
The DOJ says the probe focused on "whether formation of the joint venture facilitated collusion among the studios or decreased their incentives to license movie content to competing providers. The division considered several theories of competitive harm, but ultimately determined that the evidence does not support a conclusion that the structure of the joint venture increased prices or otherwise reduced competition in the retail markets in which Movielink competes."
The DOJ further said that it will continued to monitor activity in emerging video markets, such as VOD, in order to enforce antitrust laws.
Movielink CEO Jim Ramo says in a statement that it is "encouraging that the federal government has concluded that there is no basis under the antitrust laws for taking any action against Movielink."
Three Movielink partners, however, are still the target of an antitrust lawsuit filed in 2002 in L.A. by independent VOD service Intertainer.
Intertainer claims that Sony, Universal and Warner were attempting to fix prices in the VOD market through Movielink, and that the studios had used confidential information supplied by former Intertainer employees to create Movielink.
A trial in that case has been tentatively set for next February.