Publishers spark end to price-fixing

Net Book Agreement: Retail chains set to discount popular titles as leading companies withdraw from cartel

A full-blown price war is set to erupt in the UK book trade following the decision yesterday by three large publishers, HarperCollins, Pearson and Random House, to abandon the Net Book Agreement, the country's last remaining legal price-fixing scheme.

Popular titles may be available for as much as 50 per cent off established prices from the start of next month when the publishers "de-net" their books.

The announcement marks the death of the NBA, industry leaders agree. The Publishers Association, which administers the voluntary agreement, is to hold a meeting tomorrow to discuss the NBA's future, but it conceded publicly last night that the departure of three more publishers was "the nail in the coffin".

Leading book retailers, including WH Smith's, immediately announced they would begin to discount popular titles and a promotional programme will be unveiled next week at Waterstones, its high-street chain. The company called it "the largest ever initiative to bring quality books to consumers at lower prices".

Asda, the supermarket chain that has led the battle against the NBA, responded by saying: "We guarantee that we will be the lowest-price seller of popular books in Britain."

Asda has been selling selected titles published outside the agreement since early this year, notably the latest John LeCarre thriller, Our Game, sold at half price.

It was served an injunction earlier this year when it attempted to sell books published under the NBA at a discount. It then complained to the Office of Fair Trading and the European Commission. The challenge to the EC is now considered to be moot by industry analysts.

Hodder Headline, the publicly quoted publisher which issued a profits warning yesterday following a slow summer, welcomed the news. Tim Hely Hutchinson, its chief executive, said. "This will give the market a serious stimulus."

Hodder & Stoughton left the NBA last year, and has been campaigning for its abolition every since. It joined media giant Reed, which publishes books under the Secker & Warburg, Heineman and Methuen imprints, which broke ranks with other publishers in 1993.

Pearson managing director, Frank Barlow, said: "It has been increasingly clear for many months that the NBA could not withstand market forces for much longer,"

Even so, the Booksellers' Association continued to defend the NBA last night, warning that the collapse would lead to higher prices for non best- selling books and threaten the specialist bookseller. Tim Godfray, association chief executive, said: "Booksellers will not be able to compete and many will go out of business, particularly the small ones."

The association's president, Willie Anderson, who is also managing director of John Smith Bookshops, added: "Booksellers are now faced with a price war, which can only be to the detriment of both independent booksellers and consumers." The association argued that book buyers will get "short-term discounts on a slim range of titles in exchange for their current rich choice".

Critics also fear the British market will begin to resemble American bookselling, where large retailers dominate.

It is estimated that about 50 per cent of Britons do not regularly purchase books. Critics of the NBA believe its collapse will help "grow the pie" of book retailing by attracting customers to heavily discounted titles sold through non traditional outlets.

At least initially, large supermarkets are expected to have the edge. Asda said it had signed a multi-million pound agreement with HarperCollins and Tesco, which has so far stuck to the NBA, added that it was "watching developments".

But large retailers, including WH Smith, are also expected to discount aggressively.

The NBA was last reviewed fully by the OFT in 1982, when it was declared to be in the public interest. Publishing analysts said last night that the book retailing market had matured since then and book production costs had declined through the introduction of new technology. A legal price- fixing agreement looked harder to justify.

How books are sold trade A reader's digest of books debate

t Price fixing has been a part of the British book trade since the early part of this century.

t The Net Book Agreement was a response to the 1956 Restrictive Practices Act. It covers about eight in 10 books.

t It was examined by the Restrictive Practices Court in 1962 and found not to operate against the public interest.

t Publishers and sellers set minimum prices for certain books to try to ensure the widest possible range of books is available.

t They claim it stops the shelves being filled with bestsellers by the likes of Jeffrey Archer or Jackie Collins, which would threaten the viability of hundreds of small bookshops and the nation's literary and educational well-being.

t Opponents say shops should sell the most wanted books at the lowest prices.

t If the NBA vanishes, bigger bookshops will gain an even greater share of the market.

t Asda is a leader of the supermarket book trade. It has tried to cut the price of books covered by the NBA, but was stopped when the Publishers' Association alleged breach of contract and took legal action.