ACCC not to oppose the proposed acquisition of Borders Australia by Angus & Robertson

The Australian Competition and Consumer Commission will not oppose the proposed acquisition of Borders Australia by A&R Whitcoulls Group Holdings (owner of Angus & Robertson), ACCC Chairman, Mr Graeme Samuel, said today.

After an initial investigation the ACCC published a Statement of Issues on 28 November 2007 which identified a number of preliminary concerns with the proposed acquisition. The ACCC conducted an extensive investigation examining internal company documents and seeking information from a range of interested parties regarding the effects of the proposed acquisition in all relevant markets, including retail and wholesale markets for books.

"In reaching its decision in relation to retail markets, the ACCC considered the constraint provided by existing book retail chains, such as Dymocks and QBD, and the possible expansion of these chains to further constrain the merged entity post acquisition.

"The ACCC also took into account the partial constraint imposed by department and discount department stores, which offer a small range of books at competitive prices, as well as small chains and independent book retailers, which tend to compete more on the basis of service and specialist ranges which cater to particular customers' needs.

"The ACCC reached the view that while each of these constraints is limited in its own right, the combination of these constraints is such that no substantial lessening of competition is likely in book retailing.

"The ACCC's inquiries confirmed that Angus & Robertson currently prices many of its books above recommended retail price. The ACCC was concerned that Angus & Robertson would attempt to roll out this policy in Borders post-acquisition. However, the ACCC noted that Borders has also recently implemented a policy of selling some books at prices above RRP anyway. Further, as customer and retailer awareness of backlist pricing grows, other book retailers will be in a position to highlight their lower prices and win customers from Borders and Angus & Robertson if they attempt to increase prices further," Mr Samuel said.

Inquiries suggested a likelihood of some reduction in discounts currently offered by Borders. However, in light of the combination of constraints from other retailers, the ACCC considers that the ability of Borders post-acquisition to roll back these discounts will be limited and is not likely to amount to a substantial lessening of competition, as prohibited under section 50 of the Trade Practices Act 1974.

The ACCC also examined the effect of the proposed acquisition on the market for the supply of books from publishers and wholesalers to retailers. The ACCC concluded that while there may be some shift in bargaining power between publishers and the merged entity, which may result in a small reduction in the number of books published, such a reduction in unlikely to constitute a substantial lessening of competition.

A Public Competition Assessment with more detailed reasons for this decision will be available on the ACCC's website, www.accc.gov.au, under Mergers in due course.

Background

Section 50

Section 50 of the Trade Practices Act 1974 prohibits mergers and acquisitions that will have the effect, or are likely to have the effect, of substantially lessening competition in a market. Section 50(3) sets out a non-exclusive list of matters that must be taken into account in determining whether an acquisition is likely to substantially lessen competition.

The ACCC conducted an informal merger assessment process in relation to the proposed acquisition in accordance with its published guidelines. The ACCC's Merger review process guidelines are available on the ACCC website.