Anticipated acquisition by Hachette Livre SA of Hodder Headline Limited

Affected market: Book publishing

No. ME/1219/04

Please note that the full text of the decision can be downloaded by using the link on the right . What follows are extracts regarding the parties, the transaction, jurisdiction, assessment and decision.

Please note square brackets indicate figures removed or replaced by a range at the parties' request

The OFT's decision on reference under section 33 given on 15 September 2004

PARTIES

Hachette Livre SA (Hachette) is active in book publishing. It is a wholly-owned subsidiary of the Lagardère group, active worldwide in communications/media/publishing, high technology and defence and aerospace. For the financial year ending 31 December 2003, the UK turnover of Hachette was approximately [ ].

Hodder Headline Limited (HH) is the publishing arm and wholly-owned subsidiary of WH Smith Plc. For the financial year ending 31[August] 2003, the UK turnover of HH was approximately [ ].

TRANSACTION

Hachette [announced its intention] to acquire HH on 2 August 2004. The acquisition was notified on 3 August 2004 and the 30 day statutory deadline is 15 September 2004.

JURISDICTION

As a result of this transaction Hachette and HH will cease to be distinct. The UK turnover of HH exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

ASSESSMENT

The parties overlap in the publication, sale and distribution of books. For the purposes of this assessment, the impact of this anticipated transaction has been considered in relation to book publishing and sales to resellers (within the categories of general literature in hardback; general literature in paperback; children's books; school text books; academic and professional; scientific, technical and medical; and dictionaries) and distribution services (third party outsourced operations).

The combined shares of supply in the UK of the merged entity will be relatively low (less than 20 per cent) on the narrowest and broadest product definitions considered, comparable or lower than the shares of its closest competitors. The increment to the share of supply will also be small (10 per cent or less) in each case as a result of the transaction. 

A number of factors lend additional support to the conclusion that the merger will not materially affect competition. Third parties tended to confirm that the book publishing sector in the UK is fragmented and competitive. Among a number of smaller rivals, the merged entity will face competition from the three largest publishing houses in the UK, each of which has a strong presence across the product range of the publishing sector. Moreover, barriers to entry and expansion appear to be relatively low in respect of both publishing and sales, and third party distribution services.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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