Posted Feb 21 2022 at 7:30 PM
This is undoubtedly the only certainty of this burning issue: the Editis-Hachette merger will not take place as it stands. Vincent Bolloré recognized this himself, in mid-January, during his hearing by the Senate’s Cultural Affairs Committee: “A giant Hachette-Editis, that will not happen in France without measures taken because their size is too large . »
Very Franco-French, this mega-operation will be targeted by the antitrust in Brussels. “Legally, no text indicates a concentration threshold not to be exceeded in the event of a merger-acquisition. But the doctrine in Europe is that from 40% of cumulative market share in a sector or a market segment, there is a presumption of a dominant position”, deciphers an expert in anti-competitive issues.
In detail, Hachette and Editis are the French number one and two in publishing and distribution with 45% of the overall market share in 2021. In certain segments, this sometimes exceeds 50% and even 60%. Concentration thresholds that go higher by integrating the distribution aspect – sinews of war and profitability in the sector – of the two giants who are in contract with a slew of third-party publishers via their subsidiaries Hachette Distribution and Interforum. In comics, their combined market share in publishing and distribution was 23% in 2021, but climbs to 67% including their roles as distributors.
“Huge conglomerate effects”
“The issue of distribution is the focal point of this merger as they are the two most powerful structures in the industry when it comes to market access – i.e. bookstores, supermarkets…” notes Vincent Montagne, head of Media-Participations (Dargaud, La Martinière/Le Seuil), fourth French actor behind Madrigall (Gallimard, Flammarion). “On the third level [les petits points de ventes comme les Maisons de la Presse, NDLR], their combined market share would even amount to 100%. Clearly, a full merger would give the consolidated Hachette-Editis group an exceptional capacity for negotiations with all points of sale.
“The balance of power is complicated with the commercial teams of one and the other, especially in terms of commercial discounts [le prix auquel le libraire achète le livre au distributeur, NDLR], where they are already lower bidders than their rivals. We dare not imagine the steamroller that would be an Editis-Hachette set, ”argues Guillaume Husson, general delegate of the Syndicate of the French bookstore who also fears the ramifications.
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“It would create huge conglomerate effects. The consolidated group would have the ability to attract successful authors by promising them marketing operations in their own media as well as large upside thanks to the financial surface at its disposal. Which would dry up the small publishers considerably, ”he continues. And thereby editorial diversity, as well as less capped and/or “bankable” authors.
Attempt to expand the relevant market
In the United States, the American Department of Justice also launched legal proceedings in November aimed at blocking the $2.18 billion mega-acquisition of Simon & Schuster by Penguin Random House (Bertelsmann), emphasizing in bright red this risk: “After the merger, these two huge publishers will control more than two-thirds of this market, leaving hundreds of authors with fewer alternatives. […] American authors and consumers will pay the price for this anti-competitive merger. In the United States, the two groups are respectively number one and four in the sector.
The only angles of attack for Vivendi: invoking the war of attention with the other entertainment sectors to try to redefine and expand the relevant market, while minimizing itself in relation to Gafam, as has been done recently. Vincent Bolloré, calling Vivendi a “dwarf”.
“But the argument of saying: ‘we are creating a European publishing champion’ is not tenable since Editis is mainly focused on the French market”, argues Jean-Luc Treutenaere, president of the Syndicate of leisure distributors including the Cultura and Le Furet du Nord brands. “And Vivendi cannot mention the Amazon danger either in France, since this only represents approximately a little more than one in ten sales, whereas in the United States it amounts to 50% of the market. For the Brussels competition policeman to give the green light to the Editis-Hachette operation, Vivendi will have to present him with good anti-competitive “remedies”.