November 1-15, 2003 Edition

HOME: EC Could Block Lagardere Vivendi

Merger on Grounds of Distribution Monopoly LONDON/10/27/03—The European Commission Monday sent its “statement of objections” to publishers Lagardere and Vivendi Universal Publishing, which could block Lagardere’s $1.5 billion proposed purchase of Vivendi’s publishing unit. Some observers call the document a potential deal breaker, and said the changes required by Largardere would have to be massive to gain EC approval.

At the heart of the Commission’s objections is concern that the publishers’ two large distribution centers, when combined, would give Lagardere’s Hachette unit dominance in the French market place.

Both book distribution centres carry books from other publishers, but the Commission is concerned that combining assets of the two companies would create a publishing monopoly.

The commission earlier said that significant disposals must be made to allow for competition before it would approve the deal.

The Commission’s statement is critical to the deal since it will make its final decision by January 13 only on the basis of that document.

Lagardere has said it realizes the two companies, believed to own more than 50 percent of the French market, will have to reduce their share of the French book market if they are to win the Commission’s approval.

Such a move would decrease the combined market share for the merged companies to 40 percent or less.