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Justice Department probes major theater chains for antitrust violations

Ever wonder why it’s hard to find those big summer blockbusters at your local indie movie chain? The cause, at least in part, is thanks to what the industry calls “clearance agreements,” which ensure exclusive studio releases to major theater chains. The practice is now under investigation by the Justice Department, which is looking into the nation’s three largest theater chains, Regal, AMC Entertainment, and Cinemark, to see if they’ve violated anti-trust laws.

Reported by Deadline, AMC Entertainment, and Regal both announced that they received a Civil Investigation Demand from the Justice Department’s Antitrust Division last Thursday, and AMC also revealed it received notice from the Ohio Attorney General on Friday.

Related: Why major theater chains should stop fighting Netflix and work with it

According to the report, each company must comply with “the production of documents and answers to interrogatories concerning potentially anticompetitive conduct, including film clearances and participation in certain joint ventures.” In other words, the Justice Department believes clearance agreements may be in violation of antitrust regulations, allowing the majors to hold an unfair advantage over the competition.

In a statement, Regal today claimed that it “does not believe that the DOJ or state investigations will produce evidence the Company has engaged in any anticompetitive conduct in violation of Federal or state antitrust of competition laws,” but also added that it could provide “no assurances as to the scope, timing, or outcome” of the probe.

For its part, AMC Entertainment toed the same line, claiming it is “cooperating with the relevant governmental authorities,” but couldn’t predict the “scope, duration, or outcome of these investigations.”

Smaller theater chains have been crying foul for years over clearance agreements which they claim harm the consumer by limiting choice, as well as creating an unfair marketplace in which the larger chains are able to muscle smaller outlets out of the movie business altogether.

The Wall Street Journal reported in April that the Justice Department was stepping up its investigation, and we’re now seeing the results of those actions in definitive probes seeking to find out if, indeed, the big three have engaged in unfair, or unlawful practices to keep the smaller chains out of the loop.