SCHOLARLY COMMUNICATION
Information Access Alliance
Challenging anticompetitive behavior in academic publishing
by Mary M. Case
ibraries conduct business with numerous Mergers and scholarly publishing L companies to acquire scholarly resources While mergers and acquisitions in publishing for their user communities. Over the last 10 reflect a general global trend, librarians have to 15 years, however, many of these compa been concerned with the growing concentration nies have been bought and sold, resulting in within scholarly publishing, especially as it fewer and fewer publishers in the commercial has affected scientific, technical, and medical marketplace. (STM) journals and legal serials publications. For example, LexisNexis, Martindale Hub Enhanced revenue, improved effi ciencies, bell, Butterworth, Harcourt, Holt, Rinehart & and reduced costs are often mentioned by Winston, Cahners, JAI Press, Chilton, CIS, Ac companies as the justification for mergers. ademic Press, BioMed Net, Engineering Infor Within scholarly publishing, however, mation, Pergamon Press, Beilstein, Cell Press, librarians have watched the number of com Mosby, Churchill Livingstone, Saunders, and panies shrink while prices rise and service Elsevier Science, among other companies, are declines. Individually, library associations in now all owned by Reed Elsevier. the United States have conveyed their con Wolters Kluwer owns CCH, Aspen Publish cerns about major mergers to the Department ing, Lippincott Williams and Wilkins, Waverly, of Justice. These included the 1991 purchase SilverPlatter, and Ovid. In 2003, Wolters of Pergamon Press by Elsevier Science, the Kluwer sold Kluwer Academic Publishers to ThomsonWest merger of 1996, the proposed Candover and Cinven (a private partnership merger of Reed Elsevier and Wolters Kluwer of British equity firms), which has merged in 1997, and the purchase by Reed Elsevier Kluwer Academic with SpringerVerlag—also of Harcourt General in 2001. purchased in 2003 from Bertelsmann AG. All of these transactions were allowed to Another major publisher, Taylor and proceed, although Thomson and West were Francis, has been aggressively purchas required to divest a small number of journal ing companies over the past decade, in titles that overlapped in content, and the Reed cluding Gordon and Breach, CRC Press, Elsevier/Wolters Kluwer deal was ultimately Garland, Carfax, Europa Publications, abandoned by the companies. Lawrence Earlbaum, Marcel Dekker, Rout The beginning of 2002 brought expec ledge, Frank Cass, and Swets & Zeitlinger.1 tations of additional mergers in the STM
About the author Mary M. Case is director of the Office of Scholarly Communication at the Association of Research Libraries, e-mail: [email protected]
© 2004 Mary M. Case
310 / C&RL News June 2004 arena. Taylor and Francis made a hostile on journal prices. McCabe, currently an bid for Blackwell, creating dissension on the assistant professor of economics at the Georgia Blackwell Board. Wolters Kluwer announced Institute of Technology, had been an economist its intention to sell Kluwer Academic, while at the Department of Justice at the time of rumors surfaced that Reed Elsevier and Wolt the proposed Reed Elsevier/Wolters Kluwer ers Kluwer would be revisiting their earlier merger. McCabe was initially skeptical that this merger plan. transaction would raise concerns under current antitrust guidelines. He was encouraged, IAA’s mission however, by the attorney in charge of the The Association of Research Libraries (ARL), case to investigate why librarians around the recognizing that it was time for a new strategy country were so upset by the high prices in in confronting mergers, invited colleagues from this sector and so concerned by the prospect of several other library organizations to discuss this deal. If there was anticompetitive behavior how to pool efforts on a more publicpolicy by publishers resulting in the high prices, was focused effort to bring attention to this issue. there something unique about this market that Out of these discussions in spring 2002, the could explain why and perhaps warrant a Information Access Alliance (IAA) was born.2 novel approach to antitrust analysis? IAA includes ALA, ACRL, American As After talking with many librarians, McCabe sociation of Law Libraries, Medical Library noted that libraries differed from individual Association, ARL, SPARC, and the Special purchasers who constitute the typical market Libraries Association. These seven organiza in consumer transactions. Rather than choos tions are concerned with the impact of an ing between two or more competing products ticompetitive behaviors by STM journal and from multiple providers (e.g., Coke, Pepsi, legal serial publishers on libraries’ ability to and RC), libraries seek to collect as many provide students, faculty, researchers, health journal titles as possible from as many dif care workers, policymakers, and the public ferent providers as their budgets allow. This with important research information. feature of the library as market, along with With the advice of legal counsel and a libraries’ tendency not to cancel a subscrip strategic communications firm, IAA designed tion once it is started, allows publishers to a twopronged strategy to challenge current establish their prices across their entire col antitrust policy. First, we needed to develop lection of journals. and test economic and legal arguments that To oversimplify, publishers can increase would support an antitrust case against an prices such that the anticipated loss due to ticompetitive mergers and other practices, cancellations will be more than offset by the such as bundling; and second, we needed revenue from the higher prices. The more to build a network of informed, infl uential titles a publisher has, the higher are its opti spokespersons from industry, public policy, mal prices because the greater size allows the law, and higher education who would be publisher to “internalize” or capture more of willing to engage the media, members of the revenue that a price increase generates Congress, States Attorneys General, and the across the universe of competing journals. Department of Justice as mergers arose or For example, suppose there is a set of other action was needed. journal titles from different publishers with similar cost per use value. If one or more of The white paper on publishing mergers the publishers raise the price of their titles, Our first step was to commission a white then the remaining publishers can increase paper to provide the Department of Justice their prices almost as much, without being and members of Congress with important overly concerned about cancellations. It is this background information on the merger “best response” by the second set of remain issue. Written by attorneys at Ropes and ing publishers (raising their prices almost as Gray, a legal firm used extensively by the high) that creates the incentive for fi rms to library community for a variety of issues, increase the size of their portfolios through the white paper was based primarily on mergers and acquisitions. the economic studies conducted by Mark As McCabe states in his fi ndings, “[P]rices McCabe on the impact of publisher mergers are indeed positively related to fi rm portfolio
C&RL News June 2004 / 311 size, and [ . . . ] mergers result in signifi cant market was not working well. Given the price increases.”3 This was true even though potential for emerging technologies to many of the publishers had relatively modest improve competition, the OFT determined numbers of journals. This finding calls into that government intervention was not question the current merger guidelines that appropriate at the time. OFT indicated, suggest that a newly merged company would however, that it would monitor this market.6 need to have at least a 35 to 40percent IAA will continue to coordinate its efforts share of the market before pricing effects with its counterparts in Europe. would be measurable. Given McCabe’s fi nd ings that mergers of relatively modest size An international workshop can produce significant pricing effects, IAA, With the sale of Bertlesmann behind us, IAA in its white paper, urged the Department of is now focused on convening an international Justice to reconsider its guidelines as applied invitational workshop on antitrust issues to this industry.4 in academic publishing. Over the past few In fact, IAA had just completed its fi rst years, a number of economists and legal version of the white paper when Bertelsmann scholars have joined McCabe in analyzing AG announced its decision to sell Bertels aspects of this industry. Studies on pricing, mannSpringer to Candover and Cinven. Can consortial purchasing, and bundling have been dover and Cinven, as noted above, planned undertaken. The event will bring together these to merge the newly acquired company with researchers, along with other legal scholars, Kluwer Academic Publishers, thereby creat antitrust attorneys, economists, antitrust ing the second largest STM publisher in the regulators, librarians, and publishers, not only world, after only Elsevier Science. to vet the analysis included in the white paper, Though we had not solicited extensive but also to identify alternative theories of comments on the paper, we decided that competitive and consumer harm. We hope the it was imperative to send the Department workshop will catalyze signifi cant additional of Justice a document and letter of concern research on academic publishing and begin to noting the pattern of price increases that had build a literature in both law and economics on resulted from previous mergers. Despite our which future regulators and judges can draw. arguments, the Department of Justice ap This event is tentatively planned for fall 2004. proved the deal in August 2003. We are particularly pleased to be cospon soring the workshop with the American Anti An international issue trust Institute (AAI). In beginning to identify Because scholarly publishing is a multi legal scholars with a potential interest in our national enterprise, competition authorities issues, we discovered a number of individuals in other countries also review mergers. For who were all affiliated with AAI. AAI is “an example, the United Kingdom Competition independent Washingtonbased nonprofi t Commission reviewed the 2001 purchase of education, research, and advocacy organiza Harcourt by Reed Elsevier, while the European tion. [Its] mission is to increase the role of Commission reviewed the 2003 purchase competition, assure that competition works of BertelsmannSpringer by Candover and in the interests of consumers, and challenge Cinven. Library organizations in the United abuses of concentrated economic power in States have worked closely with colleagues in the American and world economy. The AAI England and Europe to exchange information perceives itself as postChicago centrists and strategies in making library concerns dedicated to the vigorous use of antitrust as known to the appropriate authorities. While a vital component of national and interna the two cases noted above were approved,5 tional competition policy.”7 We have already the U.K. investigation acknowledged the benefited from the advice and counsel of concerns raised by the library community AAI leadership. and suggested that further examination of Once the foundation of our argument the STM journals market by the Offi ce of is set, IAA will begin to build its network of Fair Trading (OFT) may be appropriate. key spokespersons. We will call on the library OFT did in fact conduct a study in which community to help us identify corporate lead it acknowledged that the STM journals ers whose businesses were developed from or
312 / C&RL News June 2004 depend on research conducted in universities; public officials who recognize the importance of access to research information and its im pact on the health and welfare of the country; college and university presidents willing to ar ticulate the harm that anticompetitive practices cause in inhibiting access to important research information; and members of Congress or States Attorneys General who may be willing to hold hearings or contact the Department of Justice. All members of IAA are devoted to fi nding alternative models of scholarly communication. All are promoting efforts to move to an open access environment. But we all also know that it may be several years before the current systems are transformed. In the meantime, Taylor and Francis continues its aggressive acquisitions campaign, and Candover and Cinven have in dicated their desire to purchase a third scholarly publisher. If our efforts can stop or even slow the pace of mergers of STM and legal publish ers, we can perhaps constrain price increases in some small measure and allow libraries to allocate resources to support new models of scholarly publishing.
Notes 1. For details on the merger activity of ten major academic publishers, see Mary H. Mun roe, “The Academic Publishing Industry: A Story of Merger and Acquisition.” Available online at www.niulib.niu.edu/publishers/. 2. For further information, see the IAA Web site at www.informationaccess.org/. 3. Mark J. McCabe, “The Impact of Publisher Mergers on Journal Prices: A Preliminary Re port,” ARL 200 (October 1998): 5. Available on line at www.arl.org/newsltr/200/mccabe.html. 4. For more details with citations to McCabe’s work, see the IAA white paper: Thomas M. Sus man, David J. Carter, and the Information Access Alliance, “Publisher Mergers: a ConsumerBased Approach to Antitrust Analysis,” June 2003. Available online at www.informationaccess.org /WhitePaperV2Final.pdf. 5. Because the merger investigation pro cess in Europe is far more open than in the United States (where the proceedings are largely confidential), reports from both of these merger analyses are available online. The reports make for interesting reading, although much propriety information provided by the
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C&RL News June 2004 / 313 (“Information Access,” continued from page tion (EEC) No. 4064/89 Merger Procedure,” 313) July 29, 2003. Available online at europa. companies is purged from the public record. United eu.int/comm./competition/mergers/cases Kingdom, Competition Commission, /decisions/m3197_en.pdf. “Reed Elsevier plc and Harcourt Gen 6. Office of Fair Trading, “The Market for eral, Inc.: A Report on the Proposed Merg Scientific, Technical and Medical Journals: A er,” July 2001. Available online at www. Statement by the OFT, “OFT396, Sept. 2002. competitioncommission.org.uk/rep_pub Available online at www.oft.gov.uk/news /reports/2001/457reed.htm; and, European /publications/leafl et+ordering.htm. Commission, “Case No. COMP/M.3197—Can 7. For more information, see the AAI Web dover/Cinven/BertlesmannSpringer: Regula site at www.antitrustinstitute.org/.
(Internet Resources,” cont. from page 320) links to all major airlines, hotel chains, rail ful for seeing the format and content of past roads, shuttle services, and other useful travel papers. Access: http://www.researchinglibrar sites. Access: http://www.fi u.edu/~hastyd/ ian.com/index.html. lcp.html. • Librarian’s Datebook. This site consists Retirement planning simply of a chronological listing of libraryre • Choose to Save: Education Program. lated conferences and workshops scheduled Sponsored by the Employee Benefit Re between the current year and 2014. Whenever search Institute and the American Savings possible, links are provided to conference or Education Council, this site promotes the workshop Web sites. The listing is interna concept of saving as a vital component of tional in scope and includes virtual as well as financial security. The information is orga inperson opportunities. Access: http://www. nized by age group, e.g., “Tools for Adults hsl.unc.edu/libcal.htm. Ages 40–59,” and provides links to more than • The Mentor Program: Share What You 100 online calculators. Access: http://www. Know. This site provides a list of print and choosetosave.org/tools/index.htm. Web resources on mentoring as well as links • CNN/Money: Retirement. This commer to organizations that offer mentoring services. cial site offers a simple retirement calculator The information could be used to set up a pro with topical articles for retirement planning. gram or to participate in a mentoring relation The articles are succinct and provide a good ship. Access: http://www.libs.uga.edu/mentor starting point. Access: http://money.cnn. /resources.html#Web. com/retirement/. • Papersinvited. Papersinvited is a sub • FirstGov for Seniors. Provides a lengthy scriptionbased database of Calls for Papers list of resources for seniors, including a in numerous disciplines. One of the areas number of items related to education and of specialization that can be searched in the volunteer opportunities particularly geared database is “Generalities, Library Science & toward retirees. Access: http://www.fi rstgov. Journalism.” The calls are from a variety of gov/Topics/Seniors.shtml. sources, including journals, conferences, and • Retirement Living—The Gateway to universities. A paid subscription allows the Resources for Senior Living. A site about all user to personalize many of the database aspects of life after employment. Subsections features. Access: http://www.papersinvited. range from links to retirement communities, com. state tax information, and services directo • The Researching Librarian—Web ries. Access: http://www.retirementliving. Resources Helpful for Librarians Doing Re- com/index.html. search. This site is designed to assist academic • TIAA-CREF Web Center. Primarily librarians who have publication requirements designed for TIAACREF customers to for promotions and/or tenure. The focus is manage their accounts, however, the on providing links to tools for conducting general information on investment and research in librarianship and information retirement planning resources are useful science. There is also a section of links to to anyone. Access: http://www.tiaacref. conference proceedings, which can be use org/.
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