MPs to investigate book trade's price-fixing deal
Tuesday 18 April 1995
The inquiry follows hard on the heels of the announcement earlier this month that the agreement will be reviewed by the Restrictive Practices Court at the request of the Office of Fair Trading. The moves may mark the beginning of the end for one of the country's last legal price-fixing schemes.
The National Heritage committee, chaired by Labour MP Gerald Kaufman, will hear evidence from industry groups and individual publishers, including Tim Hely Hutchinson, chairman of Hodder Headline, whose company left the agreement late last year. Asda, the supermarket group, will also appear, arguing that retail chains should be able to sell popular titles at a discount.
The NBA was last reviewed in 1962, and found to be in the public interest. The OFT itself decided not to refer the agreement in 1989.
The hearings, starting on Thursday, are bound to create tensions within the Publishers Association. In addition to Hodder Headline, the media giant Reed International has also left the NBA, arguing that price fixing is no longer necessary. But supporters of the scheme, including large publishers such as HarperCollins, remain convinced that the price floor is in the public interest.
"We feel the advantages given to industry are very exceptional," Peter Kilborn, director of management services at the Publishers Association, said. "Under the agreement, a great many titles are published on a range of subjects." He said that 90 per cent of his members are in favour of retaining the agreement.
Those in favour of the NBA fear a price war if the scheme is dismantled. They argue that bestsellers would be heavily discounted by multiple retailers. Small bookshops, which require wider margins, would not be able to match the low prices, would risk losing custom, and would find it hard to stock a full backlist. The Booksellers Association claims that prices would actuallyrise as a result of abolition .
In its reference to the Restrictive Practices Court, the OFT said that changes in technology and marketing had rendered the NBA unnecessary. Publishing costs are lower as a result of new technology, while specialist bookshops have proved their staying power.
Many booksellers and publishers disagree. "Our margins are in fact lower now than in 1962," Tim Godfray, chief executive of the Booksellers' Association, said.
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