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EU regulators likely to require a package of ‘remedies’ to protect booksellers and authors over Lagardère deal

Victor Hugo once wrote: “The mind that does not read withers like the body that does not eat.” 

In the country that gave birth to the author of Les Misérables, such sentiment has meant that literature is not supposed to be a vulgar business like any other but rather an art form to be protected. So the pending acquisition of France’s biggest publisher Hachette by billionaire corporate raider Vincent Bolloré has set the local literary world on edge.

Bolloré’s media group Vivendi is in the midst of a tender offer to buy out the 55 per cent of Lagardère, which owns Hachette, that it does not already own. If finalised, the deal would make Vivendi the third-biggest publisher after Bertelsmann’s Penguin Random House and News Corp-owned HarperCollins, and be a key step in Bolloré’s rebuilding of the group after selling most of its biggest business Universal Music Group last year. 

Antitrust regulators in Brussels will have the final word as they are now reviewing the deal. But it is already clear that book publishing in France poses the biggest potential competition problem because Vivendi already owns the second-biggest player Editis and Hachette is number one. 

Competitors have already sounded the alarm. Antoine Gallimard, the owner of the third-largest French publisher, says the deal is “unthinkable” and “harmful”. One booksellers’ union likened the future group to a “financial and marketing bulldozer” that would block unknown or unconventional authors from making it to market, reducing the “biblio-diversity” of France.

They have a point. If Vivendi were to swallow Hachette, the new group would hold about 70 per cent of the French market for schoolbooks, and more than 50 per cent for paperbacks and tourism books, according to the economist Françoise Benhamou. Hachette and Editis combined made about €1.5bn in revenue in France last year, which would make the new entity about two and a half times bigger in terms of revenue than the next two largest players Madrigall (owner of Gallimard and Flammarion) and Média Participations (Seuil and La Martinière).

Regulators are likely to require a package of “remedies” to protect French booksellers and authors from being harmed if they approve the deal. This could include asset sales in particular book categories or in areas such as distribution and logistics. Vivendi has publicly acknowledged the need for remedies.

However, there is another factor causing the consternation in the literary world that may be harder to assuage: Vincent Bolloré himself. Although the 70-year-old industrialist recently officially handed off running his business empire to his sons, he still keeps a close eye on Vivendi, which he has turned into a dominant force across French media. The group owns television channels, radio stations, magazines and newspapers, an advertising agency, and a TV and movie production arm.

Under the politically-conservative Bolloré, the group has not hesitated to give some of those outlets a rightward tilt. It turned 24-hour news channel CNews into a raucous cousin of Fox News that launched the political career of far-right presidential candidate Éric Zemmour.

Would the book publishing business be affected by Bolloré’s politics? Antitrust regulators have little ability to weigh on such political questions, but if the example of the US is anything to go by, they are paying close attention to potential competition distortions in the sector. The US Department of Justice has sued to block another major merger, Penguin Random House’s proposed $2.2bn acquisition of Viacom’s Simon & Schuster, on the grounds that it would lead to lower advances for authors, fewer books and less variety for consumers.

French booklovers do already benefit from a much stricter regulatory framework than in the US that has helped insulate publishers and bookstores from the ravages of Amazon and changing consumer habits. In the 1980s, the government decided that books were not a product like any other and decreed a “single price” for books that in effect banned discounting, and it later extended the system to e-books. That has left less of a breach for Amazon to exploit so it has grabbed only 10 per cent share of the total book market compared with 40 per cent in the US. France also still has a lot of independent booksellers. 

In such an environment, it would be a brave regulator not to insist on protection for Victor Hugo’s beloved pastime if Bolloré’s Vivendi buys Hachette.