AMC Entertainment Holdings, owned by China's largest entertainment group, Dalian Wanda Group Corp Ltd, and Regal Entertainment, the two largest movie theater chains in the US, are being sued by a Florida-based movie-theater company alleging they used their market position unfairly to force smaller players out of business.
iPic Entertainment filed the suit in state court in Houston. It accuses AMC and Regal of "coordinating their efforts and presenting ultimatums to real-estate developers," The Wall Street Journal reported on Wednesday.
The lawsuit requests a temporary injunction to prevent Regal and AMC from refusing to play any movie that also plays in an iPic theater.
IPic owns and operates 12 theatres in eight states. The locations in the lawsuit include two iPic theaters in Texas; one each in Houston and Dallas.
"This is an industrywide problem that iPic has been forced to fight in court," Hamid Hashemi, president and chief executive of iPic, told the Journal.
At issue is a movie industry practice called "clearance," where a theater can ask a film studio for exclusive rights to a movie in a particular market. The result is a scenario where competing theaters could be precluded from playing the film.
Clearance is normally more of an issue in larger markets where industry giants face off, but has come up with smaller movie operators facing dwindling profits.
The lawsuit claims: "AMC and Regal are conspiring in this anticompetitive boycott."
Regal operates more than 570 theaters in 42 states with more than 7,000 screens, and AMC has almost 350 theaters locations in the US with more than 5,000 screens, respective company data shows.
Regal and AMC did not respond to China Daily's requests for comment.
But an AMC spokesman told the Journal: "Allocated film zones are a longstanding, well-established industry practice. Allocated film zones have demonstrated benefit to all stakeholders - moviegoers, studios and exhibitors."
An iPic location in Houston that opened last week has been unable to schedule upcoming films like Concussion and The Revenant, the Journal reported. The suit alleges that Regal contacted "every major studio" in July 2014 to say it would refuse to play movies that were also given to the iPic theater in the Houston area, under construction at the time.