Hoyts has applied to the Commerce Commission for clearance to acquire the business and assets of Berkeley cinemas. Berkeley operates a few cinemas in Auckland and so does Hoyts. There are a number of other competitors in Auckland including Village, Rialto and some independent cinemas. The application claims that the acquisition will not substantially lessen competition in any market because:

• There are a large number of competitors already in the market and the merged entity will face intense competition from them.
• Barriers to entry and expansion are low; a cinema is a commodity.
• Consumers are highly price sensitive and also sensitive to quality differences.
• There is a significant competitive threat from alternative forms of entertainment.
• Film studios and distributors have countervailing market power.
• The merged entity will be better able to fund the costs of converting its cinemas to digital technology.