European films take on Hollywood's big guns in fight for future of cinema

The EU has taken on Hollywood in an important ruling which could improve life for European cinema-goers jaded by a diet of American blockbusters. It could also mean a big boost for the British film industry. Katherine Butler reports from Brussels.

Alan Rickman and Phyllida Law were in the Belgian capital two weekends ago to promote The Winter Guest, one of the hundreds of European films screened during the Brussels film festival. The work of directors from places as unlikely as Bosnia, Macedonia and Iceland, as well as more than 30 examples of the new wave of Irish cinema, were also on offer.

Yet half of all Brussels cinema-goers during the same weekend queued up outside the city's multiplexes to see Leonardo Dicaprio and Kate Winslett meet their icy fate in Titanic.

Off screen, another script was being written. European Union competition lawyers were drafting a bombshell which Brussels dropped on Friday. The European Commission demanded the dismantlement of UIP, the distribution arm in Europe for the three Hollywood studio giants Paramount, MGM and Universal.

What seems like an arcane dispute over the rules governing sales and distribution goes to the heart of a long running transatlantic war of words over what gets on to our cinema screens. And this dispute in turn goes to the core of the debate, led most vocally by the French, about how to protect and promote European cultural diversity in the face of American cinematic domination.

Whatever happens about the wider debate, it seems certain that if UIP's distribution tactics are scrapped, the Hollywood blockbuster will be affected. The catalytic effect on the small but rapidly growing European film industry could in the current climate be dramatic. Those who stand to benefit are the small, low- budget producers whose ability to compete tends to be hobbled before the box-office race even begins because they cannot break into the distribution network.

Central to European objections to UIP is the suspicion that it operates a "block booking" system which forces cinemas to buy packages which include a minimum number of weak titles, so that they are allowed to screen blockbusters such as Jurassic Park or Tomorrow Never Dies.

Sections of the European film industry even claim that UIP is to blame for Hollywood's success and Europe's failure in cinemas. Since 1987 American share of box-office revenue in Europe went from 56 per cent to more than 80 per cent.

What the European Commission has done is to tear up a special exemption which UIP has enjoyed since 1989 from the normal rules which regulate fair competition in the trade bloc. After lengthy investigations culminating in dawn raids on the offices of UIP in London, Paris and Brussels, Commission lawyers believe they have ample evidence to substantiate their decision.

UIP says the Brussels competition authorities are acting under the kind of political pressure which led a few years ago to calls for broadcasting quotas on European television stations. It says it is being scapegoated by an industry which can never produce films with the commercial appeal of their Hollywood rivals.

Perhaps most promising from the standpoint of the European industry is the timing: UIP's market share has already started to show a modest but unmistakable decline. Even UIP chiefs privately concede that European producers have been giving them a run for their money of late, mainly thanks to new tax incentives and matching government funds which some EU governments have started to pump into locally produced films.

The British MEP Carol Tongue, who sits on the European Parliament's culture committee, believes the Brussels ruling, still being challenged by the American studios, represents a critical breakthrough. It may be particularly important for the British film industry which is on something of a roll after the success of Trainspotting, The Full Monty and Brassed Off. "British films will now have a better chance of being made and distributed and of challenging American domination at the box office," she says.

She foresees an important trickle down effect. "We can expect to see more money going into British films because there will be more space for distributors of European work".

Nothing less is at stake, Tongue believes, than the survival of Europe's identity and culture. "Film is part of the cultural lifeblood of a society. We have to have space to tell our own stories hear our own voices and see the two coming together in film. And our children have the right to their our fairy stories interpreted by us. They deserve more diversity than they are getting from Disney."