A change in the rules for Oscar eligibility proposed by the Academy of Motion Pictures Arts and Sciences (AMPAS) may violate antitrust laws, according to the Department of Justice.
At issue is whether feature-length films produced by streaming services like Netflix should be eligible for Oscar consideration, even though they don’t have a significant theatrical run. The DOJ weighed in on the issue in the wake of reports that Academy board member Steven Spielberg was planning to push for such a rule change.
Spielberg first made his views on the subject known last year, telling ITV News that, while Netflix and other streaming platforms have elevated the quality of television, “once you commit to a television format, you’re a TV movie… If it’s a good show [it] deserve[s] an Emmy, but not an Oscar.” In Spielberg’s view, the movie theater experience is essential to truly appreciate and reward the cinematic art form. His proposed rule change would preclude Oscar eligibility for films that do not have a significant theatrical run.
But in a March 21 letter, DOJ antitrust chief, Makan Delrahim warned the Academy that such a rule may violate Section 1 of the Sherman Act, which “prohibits anticompetitive agreements among competitors.”
“Accordingly,” Delrahim cautioned, “agreements among competitors to exclude new competitors can violate the antitrust laws when their purpose or effect is to impede competition by goods or services that customers purchase and enjoy but which threaten the profits of incumbent firms…
[I]f the Academy adopts a new rule to exclude certain types of films, such as films distributed via online streaming services, from eligibility for the Oscars, and that exclusion tends to diminish the excluded films’ sales, that rule could therefore violate Section 1.”
The proposed rule change was seen by some as a direct attack on Netflix. Though the streaming service has garnered increasing acclaim for its feature films – including Alfonso Cuaron’s “Roma”, which took home three Oscars this year – it typically does not release its films in theaters.
Netflix responded to reports of Spielberg’s comments early last month, tweeting:
“We love cinema. Here are some things we also love:
- Access for people who can’t always afford, or live in towns without, theaters
- Letting everyone, everywhere enjoy releases at the same time
- Giving filmmakers more ways to share art[.]
These things are not mutually exclusive.”
Notwithstanding Netflix’s populist appeal, the DOJ’s position in defense of the streaming service’s Oscar aspirations simply may not hold water.
First, the objective of antitrust law is to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up. Accordingly, the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. The DOJ’s position on the Academy’s proposed rule assumes both the manner and degree to which consumers are ultimately impacted by Oscar noms. The anticompetitive impact may very well be too minor, speculative, or indirect to be considered “unreasonable.”
Second, the Academy is not a trade association in the model contemplated by the Sherman Act. Per se violations of the Act include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. Despite the Academy’s origins as a “company union,” today, it’s a collective of individuals from across the international film community. Its membership includes several streaming service execs, and the majority of members have no particular studio affiliation or allegiance.
The Board of Governors will meet on April 23 for its annual awards rules meeting. The Academy hasn’t said whether it will consider the rule change.