Libraries Urge Justice Departmen to Block Cinven and CandoverPurchase of BertelsmannSpringer

[Ann Okerson <ann.okerson@yale.edu>]

Of possible interest to the readers of this list.  Some industry analysts
have opined that having two very large competitiors in the STM publishing
business will mean more competition; the approach below suggests that two
players would not, in fact, compete.  Your thoughts?  The Moderators

---------- Forwarded message ----------
From: Judith Matz
Sent: 6/1/03 11:13 AM
Subject: ARL Announces: Libraries Urge Justice Department to
Block Cinven and  Candover Purchase of BertelsmannSpringer

For Immediate Release-May 30, 2003

For more information, contact:
Dawn Boeckermann, Metropolitan Group
(503) 223-3299 or dboeckermann@metgroup.com

LIBRARIES URGE JUSTICE DEPARTMENT TO BLOCK CINVEN AND CANDOVER PURCHASE
OF BERTELSMANNSPRINGER

Publisher Mergers Threaten Access to Crucial Research

Washington, D.C. - The Information Access Alliance, a group of six library
organizations, is urging the U.S. Department of Justice to block Cinven
and Candover's proposed purchase of BertelsmannSpringer. The Alliance is
concerned that this transaction will bring about a reduction in access to
critical research information.

Cinven and Candover, a partnership of UK-based private equity firms, has
announced its intent to acquire BertelsmannSpringer, the academic
publishing arm of Bertelsmann AG. The partnership also announced its
intent to merge BertelsmannSpringer with Kluwer Academic Publishers, which
Cinven and Candover acquired in January, to form the second largest
publisher of scientific journals in the world, trailing only Elsevier
Science.

The Information Access Alliance, comprised of the American Association of
Law Libraries, American Library Association, Association of College and
Research Libraries, Association of Research Libraries, Medical Library
Association, and SPARC (Scholarly Publishing and Academic Resources
Coalition), was created because of a shared concern about the effects of
mergers among publishers of science journals and legal serial
publications.

"Because of the anti-competitive impact we believe will result from the
combining of Springer and Kluwer Academic Publishing, the Information
Access Alliance is urging the Department of Justice to stop this merger,"
said Mary M. Case, Association of Research Libraries and spokesperson for
the Alliance.

"History shows that when journal publishers merge, consumers suffer," said
James G. Neal, Vice President for Information Services and University
Librarian at Columbia University. "The increased market power resulting
from recent mergers has allowed publishers to boost prices. This has led
to subscription cancellations, which deprive scientists of access to basic
tools they need to conduct research."

According to David Shulenburger, Provost at the University of Kansas, "the
scientific research that journals support and document is a key
contributor to the quality of life in and economic well-being of our
nation. The erosion of access to research not only poses a risk to
tomorrow's discoveries, but because the U.S. government spends $100
billion annually on research, it reduces the American taxpayers' return on
investment. It is a situation that urgently needs to be addressed."

Libraries are the main market for science journals, according to the
Alliance. Over the past 20 years, the prices libraries pay for journals
have risen at three times the rate of inflation. Analysis by the Alliance
suggests that merger activity has been a significant factor in this
inflation. For example, Harcourt's purchase of Churchill-Livingston and
Mosby in 1997 and 1998, as well as Wolters Kluwer's purchase of Plenum
Publishing, Thomson Science, and Waverly in 1998, resulted in average
prices for the journals in each of the two new combined portfolios that
were well above their pre-merger levels.

"Reduced access is particularly problematic in the medical arena," said
the Medical Library Association 's Executive Director Carla J. Funk.
"Physicians all over the country depend on access to journals to help them
with the diagnosis and treatment of patients. And researchers' access to
earlier works have led to such notable advances as the development of
penicillin and the unraveling of the mysteries of DNA and the human genome
and is essential for the prevention of medical errors in the treatment of
patients."

The emergence of electronic publishing and the Internet, rather than
solving the problem, may actually be contributing to the concentration of
market power in the hands of a few large publishers, according to the
Alliance. "The large science publishers are now offering electronic
versions of their journals to libraries primarily as large bundles of
titles, and these bundles increase in price each year at several times
inflation," according to Ross Atkinson, Associate University Librarian for
Collections at Cornell University. "If one refuses to buy the whole
bundle, and opts instead for individual journals, the prices of those
single journal titles are greatly increased by the publisher-so that a
library is left with the choice of either buying the whole bundle or being
able to afford only a limited number of journal titles from that
publisher. Buying the whole bundle also places enormous strain on library
budgets, leaving little funding left over to purchase the equally
important journals of smaller, often not-for-profit publishers. Allowing
another huge for-profit science publisher to emerge, which will likely
employ similar bundling methods, will certainly further exacerbate this
situation."

BertelsmannSpringer is a publishing company specializing in the science
and business-to-business sectors. It publishes approximately 700 science
journals. Cinven and Candover already own Kluwer Academic Publishers which
publishes approximately 700 science journal titles. The two companies
combined would control approximately 20 percent of the science market (as
measured by the number of commercial titles included in the Institute for
Scientific Information citation database).

News reports indicate that BertelsmannSpringer is being sold for more than
10 times its current pre-tax profit. Cinven and Candover have stated their
intention to increase the new combined entity's profit margin to 38
percent, in line with Elsevier Science. While operating efficiencies will
likely contribute part of the rise, experience following other mergers in
the industry shows that returns are likely to be driven by price
increases, as well.

# # #

Information Access Alliance member organizations

The American Association of Law Libraries (AALL) is a nonprofit
educational organization dedicated to providing leadership and advocacy in
the field of legal information and information policy. Our more than 5,000
members respond to the legal information needs of legislators, judges and
other public officials, corporations and small businesses, law professors
and students, attorneys, and members of the general public.

The American Library Association (ALA), the oldest and largest library
association in the world, is a nonprofit organization of over 64,000
librarians, library trustees, and other friends of libraries dedicated to
the development, promotion, and improvement of library and information
services to enhance learning and ensure access to information for all.

The Association of College and Research Libraries (ACRL), a division of
the American Library Association, is a professional association of
academic librarians and other interested individuals. ACRL currently has a
membership of approximately 12,400, accounting for nearly 20% of the total
ALA membership. ACRL provides a broad range of professional services and
programs for a diverse membership.

The Association of Research Libraries (ARL) is a nonprofit organization of
124 research libraries in North America. ARL programs and services promote
equitable access to and effective use of recorded knowledge in support of
teaching, research, scholarship, and community service.

The Medical Library Association (MLA) is a nonprofit, educational
organization of more than 900 institutions and 3,800 individual members in
the health sciences information field, committed to educating health
information professionals, supporting health information research,
promoting access to the world's health sciences information, and working
to ensure that the best health information is available to all.

SPARC (Scholarly Publishing and Academic Resources Coalition) is an
initiative of universities, research libraries, and library organizations
that supports increased competition in scholarly publishing. SPARC
publishing partnerships and educational activities encourage expanded
dissemination of research and reduced financial pressure on libraries. Its
worldwide membership currently includes 277 institutions and
organizations, with 188 members in the United States.

_______________________________ 
Judith Matz
Communications Officer
Association of Research Libraries
21 Dupont Circle, NW  #800
Washington, DC  20036-1118
Phone  202-296-2296
Fax  202-872-0884
judith@arl.org
www.arl.org