Competition Roaring in New-books Sector

In an effort to ward off Knesset member Nitzan Horowitz's initiative to ban big discounts on Hebrew books in the first two years from their publication, Israel's trustbuster delivered a strongly upbeat report on competition in the book retail sector.

The survey by the Antitrust Authority, which is headed by Ronit Kan, found a sharp increase in the number of books sold and a steep drop in prices from the year 2004. The Antitrust Authority's findings contradict the thrust of arguments made by Horowitz, whose legislative proposal would limit competition over price.

The trustbuster's investigation had nothing to do with Horowitz's bill, per se. It began at the behest of two publishing companies: Kinneret Zmora Bitan Dvir Publishers, and New Library Publishing. They asked the Antitrust Authority for permission to cooperate in publishing.

Ultimately Kan agreed to give the two companies a 2-year holiday from the law prohibiting anticompetitive alliances. Her decision was a momentous one, because Kinneret Dvir is also the owner of book retailing chain Tzomet Sfarim. Therefore, before handing down a ruling, the Antitrust Authority had to study the state of competition in the book sector in general, mainly in retail sales.

Where once the Steimatzky chain was the more prevalent, now it shares the lion's share of book sales in Israel with Tzomet Sfarim. The latter's rapid growth in recent years was the result of an extremely aggressive pricing policy, or in plain English - a policy of selling at discount prices, which aroused not a little opposition in the sector.

Among the charges leveled against Tzomet Sfarim was that the chain discriminates in favor of its owners, by giving them more shelf space. Another was that the chain's aggressive pricing policy was killing small stores, and hurting profit not only for them but for authors as well, allegedly to the point of reducing the variety of new titles being published in Israel. That was the impetus behind Horowitz's legislative drive, which seeks to ban discounts greater than 15% on Hebrew books during the first two years of their release.

But the Antitrust Authority findings refute these claims. It found that competition in the books sector has benefited consumers, not only in price but in quantity of titles as well. According to its findings, in the years 2004 to 2007 the prices of books declined and the number of copies sold rose. So has the number of new titles being published - by 25% in those years. That last finding is of particular significance, attesting that there is no sign of the variety of books lessening, and that neither publishers nor authors are suffering. On the contrary, the number of new books has boomed.

Moreover, the trustbuster stresses that the thriving publication of new books is not confined to publishers affiliated with Tzomet Sfarim. During those years, the number of new titles put out by other publishers increased by 18%, the Antitrust Authority says.

In further support of the trustbuster's position, figures from the Central Bureau of Statistics attest to a recent growth in the total outlay on books by households. "Together with the drop in prices, the data shows a real growth in the number of books bought by households in Israel in recent years," the Antitrust Authority writes.

In short the book market has grown a great deal, in volume of money changing hands and the number and variety of books sold, and that is because of competition.