Acquisition by Amazon Free from Competition Issues

Jack Humphrey, Regulatory journalist
October 29, 2011 /

The OFT has cleared the proposed acquisition by Amazon.com Inc. of The Book Depository International Limited (The Book Depository), an online retailer of books with sales in the UK and in a number of international markets. It sells books through its own website and through the Amazon Marketplace.

The Amazon Marketplace provides a venue for individuals and firms to buy and sell new and used books using Amazon’s website and sales platform.

Evidence received by the OFT during its investigation indicated that Amazon’s share of the UK online book market was strong while The Book Depository’s share of UK sales was small, accounting for between two to four percent of online retailing of hard-copy books.

In order to determine whether the acquisition would likely result in a substantial lessening of competition in the UK, the OFT considered closely whether, in spite of its small size, The Book Depository was a significant source of competitive rivalry to Amazon. In its analysis, the OFT also considered competition from other online and high street book retailers.

The evidence showed that there was limited pre-merger competition between Amazon and The Book Depository’s own website.

While the OFT found that there was competition between Amazon and a number of other retailers using Amazon Marketplace, including The Book Depository, the evidence indicated that competition within Amazon Marketplace would continue to be strong post-merger, for a wide range of book titles.

The OFT also considered carefully whether levels of competition were different as between top selling book titles and ‘deep range’, less popular titles. In terms of bestsellers, the OFT found that Amazon would face strong post-merger competition from other online retailers, other Amazon Marketplace sellers, as well as bricks and mortar retailers including the major supermarkets.

For ‘deep range’ titles, the OFT found that the merged entity would also continue to face competition and rivalry from a wide range of other online competitors and Amazon Marketplace sellers.

Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said: “Amazon has a strong position in the online retailing of books and a number of concerns were raised by third parties.

“However, following a thorough investigation we are satisfied that this small increment to Amazon’s position does not raise competition issues. The evidence showed limited competitive constraint from The Book Depository which, in fact, has shown most growth and expansion in overseas markets rather than the UK.

“We concluded that the UK book market has a significant number of bestseller and deep-range suppliers both online and off-line and that existing levels of competition will be preserved after the merger. Therefore the acquisition will not be referred to the Competition Commission for further investigation.”

 

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