OFT eyes Blackwell's-Swets merger

July 30, 1999

The Office of Fair Trading has requested details of a proposed merger between journal subscription agencies Blackwell's and Swets, following complaints from university librarians that it may infringe competition rules.

Blackwell's Information Services and Swets Subscription Service are two of the biggest suppliers of academic periodicals to universities in the United Kingdom and worldwide. Librarians last week voiced fears that the merger will lead to higher journal prices.

The companies have declined to reveal their market share on the basis of commercial confidentiality. But in a letter to the OFT highlighting the concerns of universities, David Ball, head of academic services at Bournemouth University, estimates the new venture's combined market share in periodicals to be 55 per cent. Fred Friend, director of scholarly communication at University College London, said he believed the figure to be "much higher" but that exact figures were difficult to obtain.

Mr Ball, who also chairs a library-purchasing consortium representing 34 southern universities, said the companies are two of four agencies that dominate the UK academic periodicals sector.

"For two of the four to merge is obviously a major concern to all involved in purchasing for libraries, since it drastically reduces competitiveness in the market. We shall see higher prices, less attention to quality and development of service and fewer titles being provided to our users as result," he said.

Mr Ball's consortium is one of eight representing higher education libraries. Of the eight, five have agreements for the supply of journals with Swets or Blackwell's. From published university library expenditure, Mr Ball calculates institutions' agreements with these two companies cover Pounds 17.7 million of the total higher education journals market of Pounds 31 million, a market share of 55 per cent.

"With that volume of business the new company could cut prices aggressively for a few years. Margins are small and the other companies could be forced into merging or leaving the marketplace altogether. We could finish up in a few years with only one subscription agent," he said.

An OFT spokesman said if Mr Ball's calculations are correct, it could prompt an official probe since the office is obliged to look into any deal that results in more than 25 per cent share of any market.

"At the moment, all we can say is that we have asked for more information from the companies," he said.

The concerns of university librarians are based on the experience of sustained price hiking of journals over many years. Mr Ball says Blackwell's own figures show that the average price per journal supplied by it has risen from Pounds 137 in 1989 to Pounds 358 in 1998, an increase of 160 per cent. By comparison the retail price index has risen by about 45 per cent over the same period.

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