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Indies fear for THE

12.04.07 Graeme Neill

Independent booksellers fear that wholesaler THE may get pushed out of the market regardless of a decision over its controversial merger with Bertrams. The Office of Fair Trading last week opted to refer the acquisition of Bertrams by THE's parent Woolworths to the Competition Commission after a survey carried out via the BA, in which more than 85% of the respondents were against the merger of the two wholesalers.

However, several independent booksellers predicted that, regardless of the CC ruling, the industry could ultimately still end up with two wholesaling businesses. One independent said: "Even if the merger is turned down, how long could THE continue trading as a standalone business? Bertrams has been offering incentives for booksellers to jump from THE to them by matching their percentages. It's becoming increasingly cut-throat, and the fear is that THE will be pushed out." Another said: "This is a real threat to independent retailing."

Graham Rand, books general manager at THE, said the company was still running in competition with Bertrams. "We are doing our best to ensure THE is a going concern. Nobody has closed any accounts with us, and we're still doing well with our independent business. Gardners are fighting hard to capitalise on the situation, but we're not aware of anyone switching." Until the CC reports in September on the merger, Woolworths has to run Bertrams and THE as separate companies, and is banned from sharing commercially sensitive information. THE's 30-strong books commercial team has been retained, along with 150 warehouse staff.

Rand admitted there was an "element" of toughness in the market. "One of our arguments [to the CC] will be that there has been a decline in the independent bookselling sector, and therefore its ability to support three wholesalers will decline. We'll also argue that indies still have a lot of choice in supply—they can buy direct from publishers or off other retailers."

Bertrams c.e.o. Terry Reilly denied any poaching of customers ahead of the merger. "We are out there competing for business," he said. "We have always been doing that and will always do that."

The OFT opted to refer the merger to the CC after a survey carried out via the BA. In an email to the BA, Keith Crowe from the Loch Croispol Bookshop said: "It would make it more difficult for both small independent publishers and small independent booksellers, leading to further concentration of publishing and bookselling."

The CC inquiry is to be headed by Diana Guy, who cleared the HMV acquisition of Ottakar's, finding that the UK book industry was in "rude health". Her provisional findings will be released at the end of July or the start of August.

Woolworths' subsidiary Entertainment UK bought the Bertram Group for £29m in January, following its acquisition of THE last year, and set out to merge THE's book business into Bertrams, with the loss of 640 jobs.

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