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OFT refers acquisition by HMV Group plc through Waterstone's Ltd of Ottakar's plc

224/05    6 December 2005

The OFT today referred the anticipated acquisition by HMV Group plc through Waterstone's Ltd of Ottakar's plc to the Competition Commission.

The OFT has decided that the test for reference is met in relation to the retail sale of books to consumers, particularly by dedicated book retailers who sell a wide range of titles (large range book retailers).

John Fingleton, Chief Executive of the OFT, said:

'This transaction brings together two book retailers that compete closely on a number of non-price factors such as range and variety of books, and service quality, primarily at the local level. In particular our economic analysis shows that Ottakar's competes harder on non-price factors when a Waterstone's is nearby. 

'The unusually high level of consumer complaints to the OFT shows that UK book-buyers value the fruits of this competition, which the merger would eliminate. We are asking the CC to explore these concerns further.'

The CC is expected to report by 22 May 2006.

NOTES

1.  The Reference Test — The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. The full text of this decision will be available from the Mergers section of this site.

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