Thursday, 11 August 2011
ACCC 'not opposed' to Pearson acquisition of REDgroup online business

The Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose the acquisition of REDgroup Online by Pearson Australia Group.

In its competition analysis, available online here, the ACCC concluded that the acquisition 'was unlikely to result in a substantial lessening of competition' in the book retailing industry.

The ACCC said it considered the acquisition in the context of whether Pearson's vertical integration into online book retailing 'would provide Pearson with the ability and incentive to foreclose the supply of books to its rivals in book retailing'.

Based on market inquiries, the ACCC found that 'Pearson faces competition from other publishers and distributors in the supply of books to retailers', and this competition 'would be likely to constrain Pearson from attempting to foreclose the supply of books to competing retailers'. The commission said that Pearson also faces competition from alternative publishers for the acquisition of authors. 'Authors are likely to seek publishers who are able to offer a wide distribution footprint, and this is likely to provide a further constraint on Pearson,' said the ACCC.

The ACCC said 'in relation to aggregation at the book retailing level', the commission 'considered that prior to the acquisition Pearson's online presence was minimal, and provided no meaningful competitive constraint on the target business'.

The ACCC also concluded that as 'barriers to entry into online book retailing for publishers such as Pearson did not appear to be high', it was likely that the publisher 'would have been able to enter into online book retailing in the absence of the completed acquisition'.

The announcement follows an 'informal review' of the acquisition undertaken after the Australian Booksellers Association raised concerns about Pearson's purchase of the onlne bookselling business.

Pearson announced on 27 July that it had finalised the purchase of the online businesses from REDgroup administrators Ferrier Hodgson. Pearson COO Dionne Higgins confirmed to the Weekly Book Newsletter at the time that the online businesses will operate under a division of Pearson called Bookworld.

pearson redgroupretail ferrierhodgson accc acquisition