The report concluded that a 'complex monopoly situation' exists among five main film distribution companies - Buena Vista (Walt Disney's distribution wing), Columbia, Twentieth Century Fox, Warner Bros and UIP - all affiliated to Hollywood studios. Their domination makes it difficult for independent cinemas to secure popular movies.
The big Hollywood studios use this system of 'alignment' to supply their best films first to their own linked cinema chain, and deny them to nearby competitors. This is significant, the UK has the greatest concentration of ownership of any major cinema market. A mere five cinema chains control 1,106 - or 63 per cent - of the 1,757 screens in the country.
The MMC also criticises the distributors' practice of insisting that films are shown for a 'minimum exhibition period' of at least four weeks, clogging up screens and squeezing smaller films out of the picutre entirely. Their report suggested reducing this to a two-week minimum.
But while both these MMC findings will be welcome for small independent cinemas, the film industry is quite correctly governed by consumer choice. And here's the rub. If every cinema wants to show films such as Jurassic Park or The Lion King - because these blockbusters arrive with a buzz reverberating from their US releases (not to mention their advertising budgets or merchandising spin-offs) - then there will clearly be far less choice for the consumer who decides he wants to see films like Farewell my Concubine at his local cinema on a Saturday night.
A mere 13 per cent of all films will make a profit. These are the unequivocal hits such as Jurassic Park and Mrs Doubtfire. A further 24 per cent will recoup the costs of prints and advertising only. So only 37 per cent of all films directly cover the cost of their cinema release.
In other words making, distributing and exhibiting films is an incredibly risky business, and this is precisely why alignments exist in the first place. Hollywood simply wants to control its investment at every level. As more than pounds 650m has been invested in cinema construction in the UK - mostly from the US - since 1985, few industry observers were surprised when the MMC report did not impose punitive restrictions on their trading practices: this could have resulted in a rapid decline in investment.
Aligning certain films to certain screens was pointedly condemned by the commission in 1983, but it was then concluded by the MMC that the industry was too weak to act on its recommendations. Now that the industry has grown strong - distribution was worth more than pounds 103m in 1993, with box office receipts of pounds 289m - the MMC has decided not to threaten heavy penalties for fear of offending the Americans.
Ironically, the invasion of multiplexes has virtually undermined the practice of alignment anyway. Because of the number of screens the big multiplexes have to fill, there is always a huge demand for as many films as possible.
It must also be noted that the MMC did make one important exception to its recommended end to alignment: when a restricted release makes more business sense. Direct competition between cinemas in areas where there are no multiplexes could force the closure of the poorer-performing one.
What the MMC should have looked at is the reason why a cinema cannot currently show more than one film on the same screen. Why, for instance, can The Lion King not be played in a matinee slot and the action film Speed shown in the evenings?
Ironically, most small exhibitors and distributors do not believe that the US-integrated chains operate in a sinister way, but recognise it is good business to provide the best equipment with their films. It is in fact the multiplexes, which mushroomed during the second half of the Eighties to fulfil expanding consumer demand, that fuelled the small exhibitors' calls for the MMC inquiry.
Where distributor and exhibition link-ups become a major issue is with specialised, particularly European (subtitled) films. Two main groups in the UK, Artificial Eye - which recently linked up with Mayfair - and Mainline, acquire films intended to be shown at their own cinemas. In London, which accounts for around 60 per cent of revenues for such films, the distributor will usually only show films in other outlets if its own cinemas are already full. Mayfair in particular usually grants its flagship Curzon cinema an exclusive for the Greater London area.
Some industry observers argue that it is only this kind of integration that allows specialised films to be commercially viable in the UK. But the policy can also be considered responsible for creating a scarcity of prints and very limited releases for a large number of films which in other countries will tend to enjoy a wider distribution.
The MMC's decision should have a beneficial knock-on effect for makers of traditional arthouse films, because cinemas increasing pre- buy films at script stage, enabling the projects to go ahead in the first place.
Possibly the best thing about the MMC report is that the Government has had a long hard look at the industry's practices and finances and now has the information that could revitalise the British production sector - if used correctly.
After all, most people involved in the UK film industry do not advocate a break-up of the vertically integrated distribution-exhibition systems, American owned or not. They simply want corrective mechanisms applied to the monopolies that have been allowed to arise.
The Government should seriously consider making tax incentives available to the major distributors against their commitment to invest a proportion of their revenues in new commercial British films. This opportunity should have been seized with the publication of the MMC report, especially when there is so much buzz about British films, largely due to the success of Four Weddings and a Funeral. This would have really provided the MMC saga with a happy ending.
The author is editor of 'Screen International'.Reuse content