Book Retailers Permitted to Turn the Page on Asset Acquisition

The two largest book retailers in Quebec are clear to proceed with a proposed asset purchase transaction, according to a statement released by the Competition Bureau on September 29, 2015.

A subsidiary of Groupe Renaud-Bray inc. (Renaud-Bray) will acquire 14 French-language bookstores, 1 English-language bookstore, and the associated web operations from Groupe Archambault Inc. (Archambault). All of the target assets are located in Quebec.

In the course of its investigation into the possible anti-competitive effects of the transaction, the Bureau was primarily concerned with the following issues:

• the potential impact of Renaud-Bray’s increased ability to influence the number of titles produced or books sold by publishers in Quebec;
• the ability of Renaud-Bray to secure more favourable trade terms with suppliers that could then be passed on to the consumer in the form of higher suggested retail prices; and
• the likelihood of a post-merger increase in Archambault’s retail prices.

The investigation revealed that, given the relatively low wholesale price elasticity of publishing books for general readership, it is unlikely that the number of titles would be significantly affected by Renaud-Bray’s increased post-transaction business volume. In addition, the Bureau found that a material increase in retail prices of trade books would simply not be profitable.

As to the potential for horizontal market harm, there was no indication that the presence of Renaud‑Bray or third‑party competing bookstores had an impact on Archambault’s pre-transaction pricing strategies.

Based on the results of the investigation and the fact that over 150 independent accredited bookstores will continue to operate in Quebec post-transaction, the Bureau was satisfied that the proposed acquisition is unlikely to result in a substantial prevention or lessening of competition in the purchase and sale of French-language trade books in Quebec.