Amazon given the nod by the OFT to acquire The Book Depository
Yesterday the OFT cleared the proposed acquisition by Amazon of The Book Depository and decided not to refer the matter to the Competition Commission for further investigation. For those not aware, the OFT has a duty to refer matters to the Competition Commission when they believe that an acquisition or merger will result in a substantial lessening of competition in the UK for goods or services.
In order to ascertain whether competition would be lessened, the OFT had to consider whether or not the current competition between Amazon and The Book Depository was so significant that should Amazon acquire The Book Depository it would in effect be "wiping out" one of the major competitors which held a sizeable market share. The OFT found that TBD did not have such a massive market share due to the fact that there are many other online retailers offering the same services that Amazon would be looking to acquire. Therefore there would still be massive competition irrespective of the acquisition.
Amelia Fletcher, OFT 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".
It might not come as a surprise but chief executive of the Booksellers Association, Tim Godfray, does not agree with the decision. He said "Amazon now has even more power to put its bookseller competitors out of business and, having done that, it will be in an excellent position to increase prices and/or reduce choice. It is good to have lots of different booksellers who operate and compete against each other in a market place offering consumers a choice of supplier, rather than having one dominant supplier with a stranglehold over the market".
Is it just "natural growth" for a retailer like Amazon to make these types of acquisitions or do you disagree with the decision made by the OFT?