Bill Caps Booksellers' Cut, Raise Publishers' Profit

MK Nitzan Horowitz (New Movement-Meretz) and Culture and Sports Minister Limor Livnat are expected to jointly introduce a Knesset bill tomorrow to govern competition in the book retail sector. They propose that book retailers cap any discount they demand from publishers at 50% of the book's retail price. Currently retailers demand discounts from publishers of up to 80%.Horowitz has been trying for some time to rein in what he views as excessive price discounting by book retailers, with deals such as four books for NIS 100, as a result of the Tzomet Sfarim chain's aggressive pricing policies. The MK sees the competition as seriously denting publishers' profits and authors' incomes to such as extent that it imperils the future of Hebrew book publishing altogether.

Limitations on book competition have drawn strong criticism from the Antitrust Authority, which has argued that the free market in the book industry has worked well, and the price competition has benefited the consumer. In light of this, Horowitz came to an agreement with Livnat limiting price discounts publishers give to retailers, but not restricting the discounts retailers can charge the public.

The input of the Antitrust Authority was not solicited in developing the new bill, which would protect publishers' profits and indirectly also authors' salaries.

It is expected that the Antitrust Authority will object to the new bill for several reasons, including the argument that all the bill will accomplish is raising the suggested retail price, which is set by the publisher, and the ultimate price paid by the consumer.

A bill which regulates pricing between a producer and retailer is without precedent in Israel. The Antitrust Authority has found that the book industry is functioning efficiently, with strong competition injected by Tzomet Sfarim, whose major competition is Steimatzky. The authority said the competition has increased the number of books sold in Israel and reduced prices. From 2004 to 2007, the authority says, the number of Hebrew books sold in Israel increased by 25%.