BOOK RETAIL PRICE MAINTENANCE (Advisory opinion)
PRESS RELEASE
Maintaining fixed retail prices for books distorts competition and prevents the renewal of the traditional retail book distribution system
The Antitrust Authority has submitted a report to parliament and the government in relation to various distortions to competition likely to stem from the provisions of a private member's Bill before the Chamber of Deputies, and a government Bill lying before the Italian Senate providing, with very few exceptions, that the retail price of books set by the publisher should remain unchanged.
Both Bills are designed to safeguard both the retail channels, namely the booksellers, who might be damaged by the growth of department stores, and to guarantee the pluralism of the publishing houses, particularly small publishers.
In the Authority's opinion, a price-fixing system is by no means an effective means of achieving these objectives. As far as protecting traditional booksellers is concerned, the Authority has pointed out that by prohibiting booksellers from retailing books at a lower price than the one set by the publishers, they are prevented, first and foremost, from winning over new customers, particularly those who are primarily attracted to buying books by promotional sales. Generally speaking, the readers most likely to be harmed by this system will be those on lower incomes, or young people, whom the authorities wish to encourage to read more. In essence, the number of readers will fall, at least those readers who are particularly sensitive to book prices.
Introducing rules to set book retail prices also fails to meet the need to safeguard small and medium-sized bookshops. The experience of other European countries shows that even with legislation of this kind and agreements binding on all booksellers, a concentration of specialised outlets is still taking place. This is due to the fact that even with fixed prices, because of the economies of scale that large retail stores are able to exploit profits are still higher than those earned by small bookshops, and the large retailers are thereby able to increase their profitability and enhance their market position.
However, the aim of establishing a book retail distribution system through a large number of booksellers operating on the market does not take account of the fact that in view of demand trends, current retailing structures might be excessively fragmented with low levels of specialisation. It is broadly agreed today that it is both necessary and appropriate to thoroughly overhaul the traditional retail distribution system in order to widen the range of services provided to customers in each outlet. But this can be hampered, or at least delayed, if bookshops are not subject to the stimulus of price-based competition, without which the backwardness of the present distribution system will persist.
With rehard to the aim of ensuring a pluralism of sources of information, the Authority believes that to meet this need, which is generally ensured by giving publishers the possibility of cross-subsidization between high-circulation books and low-circulation books, it is not essential to have a collective system of retail price fixing. Neither does price competition seem to reduce the range of titles available. The data available on the market does not show that since 1990, during which there has been greater competition from large retail stores when the retail price of books has been left free, there has been any reduction in the range of titles available in the shops. Indeed, Italy's book production seems to have increased by an annual average of 5.4% taking all the titles into account, and by 6.2% considering only the new titles, which account for 62.4% of all the new books marketed each year.
Rome, 26 June 1998