The Office of Fair Trading (OFT) must launch a Competition Commission inquiry into HMV's take over of Ottakar's book chain – if the deal goes ahead, says the FPB.
(See notes to editors)
The FPB said the merger would give HMV, which already owns the Waterstones book chain, an anti-competitive share of the total book market.
"The OFT cannot allow this deal to go through,' said the FPB's Chief Executive Nick Goulding. "HMV would use its increased power to demand discounts from suppliers, then using those discounts, it would slash prices to levels independent book shops could not possibly compete with. This is grossly unfair and must be stopped.
"Failure to act will drive many high street book shops out of business, reducing the choice of books available to consumers. It should not be forgotten that HMV sees books as a product, it has no great passion or knowledge of literature nor a desire to promote new, non-famous authors in the same way independent book shops do. Consumers really will lose out and the whole book trade will be undermined, with fewer independent shops able to support small publishers and emerging authors."
A selection of comments from FPB members:
Gordon Frankland, owner of The Hale Bookshop, Manchester said; "This will be a complete disaster for the book trade. It should absolutely be referred by the OFT to the Competition Commission. Allowing HMV this much market share would allow them to follow the supermarkets into the economics of bullying.
"Allowing HMV up to 50 per cent of the market share in specialist titles is anti-competitive. Any competition would be brutally blown out of the water. This deal would damage publishers, printers, writers and book shops, who would all lose out financially. And the reason? Just to make life more profitable for a single retailer? That cannot be right."
Mark Sames, owner of The Ryde Bookshop on the Isle of Wight, said: "There is already fierce competition in the book trade from the likes of WH Smith, which frequently sell titles cheaper than we can buy them from the wholesaler. This deal will put HMV in a similar position. We would have to keep cutting our prices, eating into our mark-up, to the point where it becomes ludicrous. In the interests of fairness and a level playing field, it should not be allowed to happen."
Carole Lewis, owner of The Bookshelf in Ashburton, Devon, said: "The OFT should refer this deal to the Competition Commission, as it would simply add to HMV's buying power. Small shops have no hope of matching that buying power. I am already unsettled by customers coming in asking about three for two offers like those they see in the big chains. The bigger the chains get, the worse it gets for us. Consumers are going to suffer because HMV is not interested in stocking new, unknown authors or unusual titles. All the chains are basically going to stock the same thing. They have no passion for books, like the independents do, it's just big business and money making. It's very sad."
Bill Shepard, owner of Coles Bookstore, Bicester said: "It is not healthy for HMV to have such a massive share of the market, especially with supermarkets selling books as well. It makes it very hard for independents to compete. If the OFT does not refer this to the Competition Commission, then what the hell will it refer? I am concerned for the consumer because of reduced choice. Twelve years ago, Waterstones was a proper bookseller with choice and knowledge. The modern Waterstones is depressingly corporate. It is a retailer that sells books."
Note to editors
On 1 November 2005, HMV Group announced that its offer for Ottakar's was to be extended for 18 days and would remain open for acceptance until the final closing date, which would be 1.00p.m. on 18 November 2005.
The Office of Fair Trading has now informed the parties involved that a decision on whether or not it will refer the offer to the Competition Commission is not expected to be announced until 2 December 2005. In light of this, HMV Group has sought and obtained the consent of the Independent Directors of Ottakar's and the Panel to an extension of the offer.
Accordingly, the offer will be extended and remain open for acceptance until 1.00p.m. on 7 December 2005, which will be the new 'Day 60' (the final day by which an offer must generally become unconditional as to acceptances under the City Code). Any further extension to the offer will be at the discretion of the Panel. 18 November 2005 will no longer be a closing date in respect of the offer.
Terms used in this announcement shall have the meaning given to them in the Offer Document.
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For further information, contact Ben Pinnington at the FPB press office on 01565 626019 / 07887 562900 or via email at email@example.com
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