Book of Samuel spells the end - Print 21 magazine article

'No merger' says the ACCC to Australia's two largest mono book printers. In an already difficult market, this decision has ensured continued inefficiency in the local book printing sector, probably denied it from becoming a regional or world force and possibly condemned one or the other to an ultimate exit from book printing, argues Andy McCourt.

The ACCC's recent decision to oppose the merger between Australia's two major book printers - McPhersons and Griffin Press (PMP) - is an example of the disconnect that exists between the worlds of globalisation and parochialism; modern commerce and yesterday's business. It is also a tad hypocritical that, with no doubt the noblest of motives, competition watchdog Graeme Samuel should thus adjudicate against McPhersons and PMP whilst ignoring the rampant consolidation in the printing sector that has reduced competition over and over again, but has delivered buckets of benefits to the health of the industry.

More tragically, the ACCC's decision may have robbed Australia of the opportunity to become a book-printing powerhouse for the Asia-Pacific region. There is no ACCC jurisdiction in China, Korea or Singapore and yet it is places like these that represent the biggest threat to competition in the book printing trade. Publishers buy on world markets - they care not one jot about competition regulations in a country of 20 million people. The issue of time-sensitivity gets less and less important and China automates its book printeries and short runs become air-freightable.

It's a micro publishng world
What is a good print run for the average Australian book? Five-thousand would be deemed healthy. Once in a Hogwart's Moon we get a bonanza production run of a globally-published book such as a Harry Potter or Dan Brown - 500,000 to one million copies - but the vast majority of Australian books in print start life with between 1,000 and 5,000 copies printed; or less with digital technology. These micro-publishing runs form the backbone of book printing and, even with a merged Griffin/McPhersons, competition to print them would still be fierce and healthy, despite the ACCC's decision.

In its summary of its opposition to the merger, the ACC notes:

"The ACCC considers that the reduction in competitive tension in the market through the proposed joint venture will likely lead to higher book printing prices (or lower service conditions) for publishers, and, ultimately consumers."

To suggest that a merged Griffin and McPhersons would somehow magically be able to drive prices for books upwards, is laughable, but publishers are no jokers. Try telling Random House, Reed or HarperCollins that trade prices have to go up and watch the work go offshore. The retail price of books dictates what the maximum trade price can be and full recommended retail prices for a new release last about three days before the prices are discounted, then discounted again until the remainder shops sell a $35 hardback for $7 or $8. The very nature of the book trade - faced with myriads of new media choices - is beset with downward pricing pressures. No one can buck a market and if consumers are asked to pay $50 for a book that should cost $29.95, they just won't buy books anymore.

Mergers = Efficiencies
In fact, with a merged Griffin and McPhersons, trade prices might even come down since the modern printing industry delivers value and service, not by cut-throat uncommercial competition, but by efficiencies in production. The examples are self-evident. Geon, BlueStar, IPMG and PMP have all achieved recent success in an almost impossible market by consolidation, M&As, capital investment, divestiture and efficient business systems. Before it merged its sheetfed operations with Geon's, most of PMP's presses were ancient, inefficient, environmentally awful and with support structures rooted in the 1980s. Today, the old PMP sheetfed division is part of an ultra-modern, efficient and progressive organisation that is not constrained from investing in both equipment and people - Geon.

Back to books. The ACCC says its decision followed publishers' stated concerns that the existing 'vigourous competition' between Griffin and McPhersons would be compromised, for mono books at least. There are many other places where short-run mono books can be printed. In Sydney, the newly-merged Ligare and Southwood Press for instance. SOS Printing prints Random House's re-orders and short runs digitally. Many sheetfed offset printers can print short-run mono books and send them out to a trade binder for hard cover binding. Self-publish houses such as Perth's Fontaine Press appear to be doing well and introducing new authors to the market, an initiative pioneered by Pat Woolley's Fast Books in the 80s.

It's ten years since the book bounty came off and the industry has still managed to fare well. In 1995-96, no less than 700 printers claimed book bounty rebates of around $22 million. Of this, PMP and McPhersons accounted for 35 percent; this means two-thirds of bountiable book printing in Australia, in 1996, was outside of the 'big two'. It's probably a very similar picture today - perhaps even more than two-thirds of books published are printed outside of the big two. The industry is still fragmented.

We need the ACCC and it must of course work to a set of guidelines under law but I fear that this decision will ultimately prove to have done more harm than good to Australia's book printing prospects.