The European Commission had approved the merger, worth around 111 billion US dollars, on 22 July, subject to certain conditions. An in-depth competition review was not carried out after Paramount made extensive commitments regarding European film distribution. These include, in particular, the sale of its stake in the distribution company United International Pictures (UIP) within the European Economic Area, as well as ten-year commitments not to merge certain distribution structures. In the Commission’s view, these measures are sufficient to address any potential competition concerns in the European cinema market.

In the US, however, the case is increasingly taking on the character of a landmark antitrust ruling. A coalition of twelve states, led by California, is challenging the merger, citing the risk of significant market concentration in major cinema releases and in the film and television industries. A federal court initially agreed with this assessment and issued a preliminary injunction prohibiting Paramount and Warner Bros. Discovery from completing the merger. The injunction was later extended until mid-August.

The federal states receive support from the Writers Guild of America (WGA). The screenwriters’ union had also filed a lawsuit, arguing that the merger would restrict competition for creative talent, reduce employment opportunities and increase pressure on pay. The WGA later withdrew its application for a separate interim injunction after the parties to the proceedings had agreed on a direct route to the main hearing.

In order to speed up the legal proceedings, Paramount finally agreed to suspend the takeover until five days after a court ruling, or by 1 June 2027 at the latest. This is likely to render the originally planned hearing on a more extensive interim injunction unnecessary. Instead, the proceedings are set to move directly to the main hearing. According to current estimates, a decision is not expected until later this year at the earliest.

However, the delay is likely to prove costly for Paramount. Under the terms of the agreement, a so-called „Ticking Fee“ payable, amounting to around 650 million US dollars per quarter, for as long as the merger cannot be completed.

Meanwhile, the umbrella organisation for cinemas has criticised the European decision UNIC. Whilst the association welcomes the conditions regarding film distribution promised by Paramount, it considers them to be insufficiently far-reaching. In UNIC’s view, the European Commission should also have taken greater account of the potential implications for cinema windows, film diversity, production capacity, distribution practices and access to film catalogues. At the same time, the association called on Paramount CEO David Ellison to honour his public commitments regarding exclusive cinema distribution and a broad cinema release strategy.

The differing assessments in Europe and the US highlight the distinct competition law standards applied in the two markets. Whilst the European Commission considers the European film market, with its multitude of international and regional competitors, to be sufficiently competitive, the proceedings in the United States focus on the impact on the US cinema market, where the claimants fear a significantly higher level of market concentration.

For Paramount, this means that international approval from competition authorities alone is not sufficient. Whether the multi-billion merger can actually go ahead will now be decided in the US antitrust proceedings – and thus in a legal dispute that is likely to set a precedent for future media mergers far beyond the companies involved.