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April 3 (UPI) -- A rule being proposed in Hollywood that would make films by Netflix and other streaming services ineligible for Academy Awards could violate federal law, the U.S. Justice Department said. The department expressed concerns about the potential rule's impact on competition and anti-trust laws in a letter to the Academy of Motion Picture Arts and Sciences, which awards the annual Oscars. The letter was obtained by Variety, The Hollywood Reporter and NBC News.
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"In the event that the academy -- an association that includes multiple competitors in its membership -- establishes certain eligibility requirements for the Oscars that eliminate competition without pro-competitive justification, such conduct may raise antitrust concerns," said the March 21 letter, addressed to academy CEO Dawn Hudson. It was written by Makan Delrahim, head of the Justice Department's anti-trust division.
The letter is a response to a push by filmmaker Stephen Spielberg for new rules to make Netflix and other online films ineligible for Oscars. He's said such films should instead be eligible for television awards, like Emmys. His stance follows Oscar wins this year by the Netflix film Roma, which had a limited run in movie theaters while it was available online. It won three Academy Awards and was nominated for seven more.
In his letter, Delrahim points to a section of the federal Sherman Act that bars agreements that limit competition.
"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 ... which threaten the profits of incumbent firms," he wrote.
"If the academy adopts a new rule to exclude certain types of films ... from eligibility for the Oscars, and that exclusion tends to diminish the excluded films' sales, that rule could therefore violate [the law]."
An academy representative said its Board of Governors will meet April 23 to discuss potential rule changes.
