The Office of Fair Trading will approve Amazon's acquisition of U.K. online retailer the Book Depository (Shelf Awareness, July 5, 2011), despite charges from industry organizations--including the Booksellers Association, Publishers Association, the Bookseller Group and Independent Publishers Guild--that the merger would create a monopoly.
The Bookseller reported that 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 U.K."
OFT chief economist Amelia Fletcher said the "the U.K. 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."
Nigel Roby, the Bookseller Group's managing director, called the decision "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 U.K. online book market is strong' which as understatements go will take some beating as a 75% share seems likely."
Tim Godfray, CEO of the Booksellers Association, told the Bookseller that "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 numbers of high street bookshops are currently declining, producing, in effect, less competition for Amazon. The suggestion by the OFT in its judgment 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.”
