OFT moves on book price fixing

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The Independent Online
BY MATHEW HORSMAN

In a move that could mean lower book prices, the Office of Fair Trading is to seek an end to the Net Book Agreement, under which books are sold at a minimum price set by publishers.

The OFT announced yesterday that it has applied to the Restrictive Practices Court to end the voluntary agreement, declaring it to be unnecessary in light of changes in the book publishing, marketing and retailing sectors.

A Commons Select Committee is to review the NBA after Easter. The Restrictive Practices Court will give publishers 90 days to prepare a response to the OFT request.

"I am utterly delighted to hear this news," said Tim Hely-Hutchinson, chairman of Hodder Headline, the UK book publisher which voluntarily left the NBA last year. "We have removed most other forms of price fixing in this country and we ought to remove this as well."

Many large and small publishers and booksellers, including WH Smiths and HarperCollins, Britain's largest hardcover publisher, have argued that the agreement protected local bookshops, allowing them to keep a sizeable stock without fear of losing business to large discount shops. The agreement also allowed publishers to produce important books with limited mass appeal.

About 38 per cent of books are sold through independent booksellers. Proponents claimed that abolishing the NBA would lead to a concentration in the market, where high-volume buyers would dominate by selling a smaller selection of best-sellers at prices local shops could not match.

But abolitionists pointed to the experience abroad. Countries where floor prices are illegal, such as the US, have seen discounted bookshops flourish, leading to lower average margins but higher sales. Aggressive marketers benefit more than established mainstream publishers when there is no minimum price.

The NBA was last reviewed in 1962, when it was found to be in the public interest. The OFT is to argue that changes in book publishing, particularly the advent of desktop editing and layout, have made the process cheaper and more efficient. The emergence of national and regional chains dedicated to providing a wide selection of titles has also ensured wide consumer choice throughout the country, the OFT is to argue.

Analysts had expected the agreement to collapse on its own, as booksellers pulled out.

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