United States v. Syufy Enterprises

Content sourced from Wikipedia, licensed under CC BY-SA 3.0.

United States v. Syufy Enterprises was a 1990 Ninth Circuit antitrust case about Las Vegas movie theaters. The U.S. Department of Justice argued that Syufy Enterprises monopolized or tried to monopolize first‑run exhibition in Las Vegas after buying up rivals. The district court had sided with Syufy, and the Ninth Circuit affirmed.

What happened:
- In 1981, Raymond Syufy opened a six‑screen theater in Las Vegas.
- After that success, Syufy bought rival theaters, and by 1984 owned all first‑run Las Vegas theaters by purchasing Cragin Industries’ 11‑screen Redrock Theatre. This left Roberts Company, which ran mostly second‑run films, as Syufy’s main competition.
- The DOJ said you can’t gain monopoly power by buying your competitors.
- The district court in California ruled for Syufy, finding there were no barriers to entry in Las Vegas cinema and that Syufy could not control prices or exclude competition.
- The Ninth Circuit affirmed the district court’s ruling. Judge Alex Kozinski wrote the lead opinion (with Wiggins joining in full and Quackenbush in part). The court stressed there were no true barriers to entering the Las Vegas movie market and that competition quickly reemerged after Syufy’s consolidation.
- The court noted practical signs of competition after the consolidation: within a week of becoming the sole first‑run exhibitor, Syufy tried to back out of a guarantee to Orion Pictures for The Cotton Club. Orion sued for breach and licensed the film to Roberts instead, and Orion also stopped licensing other movies to Syufy.
- Roberts Company expanded, growing to 28 Las Vegas screens by December 1986, while Syufy had 23.
- In 1987, Roberts sold its theaters to United Artists Theaters, then the largest exhibition circuit in the U.S.

Bottom line: The Ninth Circuit upheld the district court and found no antitrust violation, concluding there were no entry barriers and that competition returned after Syufy’s acquisitions. The decision is also noted for the judge’s colorful discussion of film titles within the opinion.