How outraged authors helped block books firm bid

Some of Britain's best-known authors are celebrating a partial victory after the Office of Fair Trading (OFT) refused to wave through Waterstone's attempt to acquire its independent rival Ottakar's.

A deluge of complaints from readers, authors and publishers prompted the competition watchdog to order an in-depth inquiry into the £96.4m bid yesterday, on the ground that it threatened a thriving book market. The Competition Commission will have until next May to decide whether to allow the creation of a bookselling powerhouse.

Critics, led by the Society of Authors and the Publishers Association, argue the new entity would be far too powerful, with a 60 per cent share of the high-street book market. This definition excludes outlets such as supermarkets, which are muscling in on the trade but offering little choice.

Anthony Beevor, the historian who wrote Stalingrad, said the proposed takeover put the diversity of the publishing industry at risk. "We are getting to the stage of commercial censorship," he said. Margaret Drabble, the prolific novelist and critic, said the OFT's decision to refer the deal was "half-way good news", adding: "The more diversity of caring bookshops the better."

The competition watchdog said the takeover threatened the range and variety of books stocked, flying in the face of assurances from Waterstone's that an enlarged group would enhance choice.

John Fingleton, the chief executive of the OFT, said the quality of service could also suffer. "This transaction brings together two book retailers that compete closely on a number of non-price factors ... primarily at the local level. In particular, our economic analysis shows that Ottakar's competes harder on non-price factors when a Waterstone's is near by ... The unusually high level of consumer complaints to the OFT shows that UK book-buyers value the fruits of this competition, which the merger would eliminate."

HMV, which owns Waterstone's, said it would "pursue vigorously" its case before the Competition Commission. But shares in Ottakar's plunged 55.5p to 353p as the City bet against the deal going ahead.

Alan Giles, HMV's chief executive, said he was very disappointed. "We believe our offer would have resulted in an enhanced proposition to customers and greater sales of books, with no substantial lessening of competition." On HMV's maths, the two groups would have a 24 per cent share of the entire book market, including supermarkets and on-line retailers such as Amazon.

Mr Giles' assurances have failed to placate many of the country's leading writers, including JK Rowling, Tracy Chevalier and Philip Pullman, who have all spoken out against the bid. Beevor said: "The unanimity of feeling that the takeover is not in the interests of the consumer - the reader - is very striking. I've never known authors to agree on anything before."

Amanda Craig, the novelist, added: "I don't know of anybody who is not deeply alarmed at the prospect of a monopoly. Authors have found the courage of desperation and will take this battle right to the wall. If you have a monoculture, people will end up with very, very boring books and that is in nobody's interest."