Amazon/TBD merger "could put bookshops out of business"

Amazon/TBD merger "could put bookshops out of business"

The Booksellers Association has said the Office of Fair Trading's decision to clear the merger between Amazon and The Book Depository will give Amazon more power to put its competitors out of business.

The OFT announced today its four-month-long investigation into the merger of the two internet companies and said the takeover would not lead to a lessening of competition within the UK book industry.  The decision has prompted calls from the Publishers Association for the body to monitor the book retailing market as a whole, particularly online bookselling.

The BA said the merger will hurtle the industry further into a “monopoly situation.”  Tim Godfray, chief executive of the BA, said: “ Amazon now has even more power to put its bookseller competitors out of business and, having done that, it will be in an excellent position to increase prices and/or reduce choice.”

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 also found that with popular books, 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.

Godfray added: “The numbers of high street bookshops are currently declining, producing, in effect, less competition for Amazon. The suggestion by the OFT in its judgement that sellers on Amazon Marketplace offer competition to Amazon, when the latter takes a commission on every sale, is difficult to understand. Any deal that threatens their survival on the high street still further should receive proper scrutiny by the government and competition authorities. In any review of competition issues, we think that the public interest aspects should play an important part.”

Richard Mollet, chief executive of the PA, said: “Whilst we respect the OFT’s decision with regards to this acquisition, we would urge the competition authorities to keep a weather eye on the development of the whole book retailing market, particularly with regards to internet retailing.”

Kate Pool, deputy general secretary of The Society of Authors, said: “It seems to me that the concerns of many in the industry -authors, publishers and retailers - about Amazon’s dominance would perhaps not have been massively allayed even if the proposed merger had been referred. I have not seen the full report but it did ask for views on Amazon’s position and influence within the industry more widely... I wonder whether that was to any useful purpose.”

Nigel Roby, The Bookseller Group’s managing director, called the OFT’s decision “a disappointment.” He said: “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 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.”

TBD has referred all press enquiries to Amazon, who referred the media to its original statement when the merger was first announced in July, which said the company looked forward to welcoming TBD “into the Amazon family”.

Editor's blog: Up the Amazon