In a decision that will be welcomed by many in the UK book trade, The Office of Fair Trading announced yesterday that it would be referring the completed acquisition by Woolworths Group plc, of Bertram Group Limited to the Competition Commission (CC). The OFT has decided that the test for reference is met in relation to the wholesale supply of books to independent book retailers in the United Kingdom. For this sizable retail sector, this transaction is a ‘3 to 2’ merger at the wholesale level – by removing Bertram as a separate competitor, it leaves independent retailers with a choice of either the merged Woolworths/Bertram or Gardner, each with a share of supply to this sector above 40 per cent.
Vincent Smith, Senior Director for Competition at the OFT, said: “UK consumers spend some £360 million a year in independent bookstores, and appear to do so largely because these retailers stock a range of ‘backlist’ and ‘mid-list’ titles and offer specialist advice and service which they value. Book wholesalers are the only way for independent retailers to obtain the repeated, swift supply of small numbers of backlist and mid-list titles – rather than best-sellers – from multiple publishers. This is essential to the quality and reliability of service independent booksellers can provide. The OFT also had insufficient evidence to suggest that new entry or expansion in wholesaling would be timely, likely or sufficient to compensate for the competition lost by the merger. As a result the OFT suspects that independent book retailers (and their customers) may suffer a reduction in choice of wholesaler and quality of service as a result of this merger.”