BA and PA set to oppose Amazon-Book Depository merger

The Bookseller - 07.07.11 | Lisa Campbell

The Booksellers Association has announced it will formally oppose the merger of Amazon and The Book Depository, with the BA saying that Amazon already had a "de facto monopoly". Meanwhile, the PA is actively considering opposing the deal.
The Office of Fair Trading (OFT) is investigating the acquisition, which is likely to be the largest the book industry has seen since the government body probed Waterstone’s takeover of Ottakar’s in 2006. According to the OFT, Amazon and The Book Depository submitted themselves for investigation, a way of speeding up the process. The OFT has twice recently referred bookselling mergers to the Competition Commission—Waterstone’s acquisition of Ottakars, and Woolworths’ purchase of ­Bertrams—with the CC eventually clearing both.

The BA, which had a neutral stance on the former, but opposed the latter, said it would make a formal submission to the OFT opposing this proposed acquisition. The Publishers Association is also thought likely to oppose the deal and is asking for its members to submit representations to the OFT or to the PA, which will compile a joint submission.
Tim Godfray, c.e.o. of the BA, said high street bookselling was already facing increasing pressure and competition from internet retailing and he was concerned the move would put a "dominant player into an even stronger position". He said: "Amazon’s current position could be perceived by booksellers already as that of a de facto monopoly that doesn’t take into account this new proposed development and its recent positioning as an e-book publisher. It is good news that this matter is being referred to the OFT.
"We in the book trade need to be ever-mindful of the fact that high street retailers cannot survive as showrooms for internet retailers indefinitely. We urge anyone with an interest in this matter to make their views known to the OFT."

The PA already has a lawyer working on its submission to the OFT. Neither Amazon nor TBD are BA members.
Amazon has declined to release details of how much it paid for TBD, or give reasons for why it has decided to acquire the Gloucester-based company. Nick Bubb, analyst for Arden Partners, said he "would have thought" Amazon would have paid “over £100m” for TBD based on its projected £120m turnover.
It is unclear if TBD’s founder Andrew Crawford, or m.d. Kieron Smith, will stay with the company post-acquisition. According to one source, Crawford will not stay beyond 2012.
Neither Amazon nor TBD would comment to The Bookseller beyond the initial prepared statement. TBD said in January it expected to achieve £120m revenue by its year-end in June and in June 2010 it reported sales of £69m and an operating profit of £2.3m. Two-thirds of its £69m sales come from overseas.
Philip Downer, former c.e.o. of Borders UK, said the deal was "a consolidation of power". He said: "The Book Depository has a global reach whereas Amazon operates in certain territories. Taking out the competition is a very strong reason to do it."

TBD responded to customers’­ dismay at the deal on Twitter by saying it would operate independently from Amazon. On its website, it added: "Working with Amazon we will look to continue to increase our vast selection of great titles and provide even better customer experience."
Comments to the OFT must be submitted by 18th July and the OFT said it expects to reach a decision on a referral by 30th August.