Elsevier cleared by OFT report

Liz Bury</p><p>
But it said it might take future action to curb anti-competitive practice if competition failed to improve of its own accord. The OFT statement was made in concluding a review of the STM journals market triggered by Reed Elsevier's acquisition of Harcourt in 2000.</p><p>
Pricing of journals was the prime competition concern to arise. The report highlighted above-inflation price increases and "substantial price disparity" between journals published by commercial businesses and those produced on a not-for-profit basis. It said commercial journal publishers' profits were up to 15% higher than those of non-commercial publishers. Increased "bundling" of print and e-journals in a single package for sale to libraries was also cause for concern.</p><p>
John Vickers, director-general of fair trading, said: "The STM market has a number of features that suggest competition may not be working effectively." The share price of Reed Elsevier fell from 560p to 522p and Taylor&amp;Francis was down from 532.5p to 508.5p at the news.</p><p>
A spokesman for Elsevier said: "We have always said that the real problem here is library budgets coming under pressure. The OFT has given us a relatively clean bill of health." David Smith, T&F c.e.o., added: "We take all these points on board. But we have always been lean to keep profits up."</p><p>
Among the "unusual" features of the market, the OFT pointed to a "fragmented" structure. It estimated that Elsevier held 41% of the market for science and technology journals (excluding medicine), and the next largest publisher 5%. The remainder were supplied by non-commercial publishers with very small individual market shares.</p><p>
But Sally Morris, secretary-general of the Association of Learned and Professional Society Publishers, said price increases did not reflect poor competition. "We agree that the market is odd, but it's not a competition issue. What's happened is that research output has grown quicker than libraries' funding. There's a mismatch."</p><p>
Lindsay Rees-Jones, a longstanding member of the UK Serials Group, expressed concern at the power of larger publishers. "Libraries have been juggling budgets against need for a long time. The new and real risk of [price] decisions being taken without consultation is disturbing." New models for charging such as "bundling" were of concern.</p><p>
But the OFT steered clear of market intervention, claiming that new technologies could force change. The emergence of online journals, as well as direct publishing by academics on the Internet, represented a fundamental shift in the market.</p><p>
Also, the global nature of the STM market meant that any possible action would have to be taken internationally. John Enderby, a vice-president of the Royal Society, the scientific research academy and journals publisher, described the report as "about right". "It's difficult to see how the OFT could intervene in such an international market."</p><p>