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OFT gives go-ahead for Amazon/TBD merger
26.10.11 | Lisa Campbell
The Office of Fair Trading has cleared Amazon to take over The Book Depository, ruling the merger would not lead to a lessening of competition within the UK book industry.
The OFT decided there was limited pre-merger competition between the two companies and found that competition within Amazon Marketplace would continue to be strong after the takeover. It said The Book Depository only accounted for between 2-4% of the online market for physical books, and that TBD had most of its growth in overseas markets rather than the UK.
During its investigation, the OFT looked at the levels of competition between top selling titles and “deep range”, less popular books. It found for popular titles Amazon would face strong post-merger competition from bricks and mortar booksellers, supermarkets and other online retailers, including other Amazon Marketplace sellers. For deep range titles, the OFT decided Amazon would face rivalry from other online retailers and Amazon Marketplace sellers.
Amelia Fletcher, OFT chief economist and decision-maker in the case, said: “Amazon has a strong position in the online retailing of books and a number of concerns were raised by third parties. However, following a thorough investigation we are satisfied that this small increment to Amazon’s position does not raise competition issues.
“The evidence showed limited competitive constraint from The Book Depository which, in fact, has shown most growth and expansion in overseas markets rather than the UK. We concluded that the UK book market has a significant number of bestseller and deep-range suppliers both online and off-line and that existing levels of competition will be preserved after the merger. Therefore the acquisition will not be referred to the Competition Commission for further investigation.”
Amazon announced a deal to take over The Book Depository in July. The Booksellers and Publishers Associations, the Independent Publishers Guild and the Bookseller Group opposed the merger. Nigel Roby, The Bookseller Group's managing director, said: "This is a disappointment. The Bookseller Group’s position has been that the OFT should use this opportunity to look at Amazon’s existing competitive position. It was never about Book Depository per se, which sells overseas primarily. The ruling says that ‘Amazon’s share of the UK online book market is strong’ which as understatements go will take some beating as a 75% share seems likely.
"The OFT’s test is to establish whether a 25% share of supply in the UK is created or enhanced. Patently it has. That Amazon allows Marketplace sellers access to its platform – which the OFT describes as strong post-merger competition – does not obviate that it has an overwhelmingly dominant market position."
It is currently unclear how long it will take the merger to now be completed.