I'm forwarding a letter that David Prosser sent to the members of SPARC Europe and a letter that SPARC Europe, Liber, SCONUL, and CURL sent to the European Commission.  If you share their concern about the merger of BertelsmannSpringer and Kluwer Academic Publishers, please consider writing to the European Commission at the address below.  Letters from European citizens and organizations will carry the most weight.  Americans with the same concern should write to the U.S. Department of Justice as, for example, the Information Access Alliance has done.  See the IAA's press release from May 30, <http://www.arl.org/scomm/MergerRelease-530.pdf>.

--Peter.

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Dear SPARC Europe Member,

I wanted to bring you up-to-date regarding SPARC Europe=92s activity on the proposed sale of Springer and subsequent merger with Kluwer. Together with Liber, SCONUL, and CURL, we have sent a letter to the European Commission urging them to investigate the purchase of Springer by venture capitalists Cinven and Candover. Attached is the text of the letter. We know that the EC is currently carrying out a preliminary analysis of the market to determine whether or not to launch a full-scale investigation of the merger.

I am pleased to say that both the International Association of Technical University Libraries (IATUL) and The Conference of Heads of Irish Universities (CHIU) have also written to the EC expressing their concerns regarding the merger.
Cinven and Candover are paying over 1 billion Euros for Springer - ten times the annual profit. We doubt that they plan to wait ten years before making a profit on their investment. They have already stated that their aim with the merged company is to reach Elsevier=92s level of profit (about 40%). They took a step towards this goal by announcing that Derk Haank, until now head of Elsevier, will be the Chief Executive of the merged Springer/Kluwer. If the merger takes place, Cinven and Candover will have spent over 1.5 billion Euros creating Springer/Kluwer. Obviously, they will be able to re-coup some of this investment by redundancies and operating efficiencies, but these provide only part of the equation. Cinven and Candover expect that the rest, together with the increased profit margins, will come from your budgets!

At this stage it is important that the European Commission hears as many voices as possible from amongst the customers who are going to be affected by this merger. If you believe that the merger will bring no benefits to your library or to your researchers as authors and readers then you should write to the EC now. The best address to use is:
G=F6tz Drautz=20
Director, Merger Task Force=20
Directorate General of Competition=20
70, Rue Joseph II=20
B-1000=20
Belgium
You may also be interested in the attached white paper describing the negative effects that mergers in the scholarly communications market have had on libraries and their users over the past years. It was written for the Information Access Alliance in the US. The Alliance (which includes SPARC) has taken the proposed merger to the US Department of Justice. We hope that these efforts by librarians in the two largest markets for scholarly journals (the US and Europe) will convince the relevant competition authorities that this merger should not be allowed to go ahead.

Best wishes

David

David C Prosser PhD
Director
SPARC Europe

E-mail: david.prosser@bodley.ox.ac.uk
Tel: +44 (0) 1865 284 451
Mobile: +44 (0) 7974 673 888
http://www.sparceurope.org

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[Instead of attaching the letter from SPARC Europe, Liber, SCONUL, and CURL to the European Commission, I've pasted it in below.  Instead of attaching the SPARC white paper, I'm inserting this link to the web version,
http://www.arl.org/scomm/mergers/WhitePaperV2Final.pdf
--Peter.]

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Commission of the European Communities
Directorate-General for Competition
200 rue de la Loi
B-1049 Brussels
Belgium

Dear Commissioner,

Recently, Bertelsmann AG announced an agreement to sell BertelsmannSpringer, a publisher of scientific, technical, and medical (STM) journals, to Cinven and Candover, a partnership of UK-based private equity firms that recently purchased Kluwer Academic Publishers, another STM company. As representatives of the primary customers of STM journals, we are deeply concerned that this transaction will result in a further reduction in access to critical research information. Based on our experience with previous mergers in this industry and our initial analysis of this transaction, we urge the European Commission to investigate this sale.

LIBER, CURL, SCONUL, and SPARC Europe represent the interests of a large number of university research and teaching libraries throughout Europe.  We have joined together because of a shared concern with the impact of concentration among publishers of STM journals and legal serial publications on the prices and availability of research resources.

BertelsmannSpringer specializes in the STM and business-to-business sectors publishing approximately 700 STM journals. Kluwer Academic Publishers, which Cinven and Candover have indicated they intend to merge with BertelsmannSpringer, also publishes approximately 700 STM journal titles. The two companies combined would control approximately 20% of the STM market (as measured by the number of commercial titles included in the Institute for Scientific Information citation database), but we believe that the disadvantages to the academic community from this merger are far greater than even the high number of titles would suggest.

Studies have shown that mergers in the publishing industry result in larger increases in prices than would be expected from inflation. Because the product produced by each publisher is unique - no two journal articles are identical - the normal market forces of competition do not come into play. If university staff and students need the content in a particular journal, the owners of that journal will be able to raise the price without fear that the library will go to a competitor.   To re-coup their investment (press reports indicate that Cinven and Candover are purchasing BertelsmannSpringer for over 10 times its current pre-tax profit) and raise profit margins (Cinven and Candover have stated their intention to increase BertelsmannSpringer's margins to 38%) Cinven and Candover will be able to raise prices knowing that the unique nature of the STM market will allow them to do so with impunity.

We also believe that the analyses of past mergers in this sector have not taken into account the way the primary consumers --libraries-- purchase STM journals. Price increases in journals acquired through merger do not necessarily result in the cancellation of those journals but in the cancellation of journals from other publishers, particularly the titles published by the smaller publishers. The large publishing groups are able to consolidate their market share when one of them is involved in a merger because their journals are sold to libraries in blocks of titles. The only way that libraries can meet the higher prices resulting from publisher mergers is by cancelling titles not part of these large blocks, i.e. those published by the smaller publishers.

The continued consolidation of publishers in this market segment is harmful to competition and results in increased prices for customers. Moreover, these increased prices will mean a further erosion in access to research information impeding the creation of new knowledge and slowing innovation. The fact that STM journal publications are transitioning from paper to electronic format does not diminish the negative impacts of this merger or the level of our concerns.  Publishers are able to exploit their monopolistic positions to further bundle their products, increase their market share, and squeeze out smaller competitors.

Last year, the UK Office of Fair Trading concluded that =91there is evidence to suggest that the market for STM journals may not be working well=92 (=91The market for scientific, technical and medical journals=92, OFT 396, September 2002).   The merger of the world=92s second- and fourth-largest STM publishers represents a major decline in the ability of the market to work in such a way that it benefits its customers.

At the appropriate time representatives of the library community would like to meet with staff of the Commission=92s merger control unit to highlight how this transaction is likely to have an adverse effect on prices, the availability of STM journals, the economic benefits of innovation, and the development of a knowledge environment within the European Union. In the meantime, we will continue to gather data to demonstrate the effects of this particular transaction and will forward results to you as we have them.

Yours sincerely


David Prosser
Director, SPARC Europe

Erland Kolding Nielsen
President, Ligue des Biblioth=E8ques Europ=E8ennes de Recherche (LIBER)
Director General, The Royal Library
P.O. Box 2149
DK-1016 Copenhagen K, Denmark

Toby Bainton
Secretary
The Society of College, National and University Libraries (SCONUL)
102 Euston Street
London
NW1 2HA, UK

Paul Ayris
Chair, Taskforce on Scholarly Communications
On behalf of the Consortium of University Research Libraries
Director of Library Services
University College London
Gower Street
London
WC1E 6BT, UK