Rebel Bookseller Challenges Price Fixing

Discounts on best-selling books are common in the United States, but a major British bookseller who offered bargains on six new titles was taken to court and forced to raise his prices.

Terry Maher, chairman of the Pentos group, said he will continue fighting Britain’s price-fixing system for books, but he faces opposition from competitors, publishers and authors.

“The consumer is getting a raw deal,” Maher said in a telephone interview. “We have a fairly narrow, elitist market. Books are not part of everyday life.”

His company offered an unprecedented 25% off the six books nominated for the Booker Prize, Britain’s most important literary award.

Publishers got court injunctions blocking the Pentos discounts in England, Wales and Scotland, but discounts continue in Ireland. Maher is fighting the court action in hope of overturning the Net Book Agreement, a voluntary accord that allows price fixing.

Pentos, a fast-growing operation, controls 11% of the British market through 95 stores, including Dillons and Mowbray. It recently acquired Hatchards, the 193-year-old London bookshop patronized by Queen Elizabeth II.

Maher argues that discounts will move books in greater, profitable numbers and draw customers into shops where they can be tempted by full-priced books. He points out that book clubs already are allowed to discount.

His opponents, including the Publishers Assn., Booksellers Assn. and Society of Authors, say discounts would start a price war between Pentos and the huge W. H. Smith chain that would devastate small bookshops.

They claim that discounts would cut the profit margins publishers use to produce books that are important, but lose money.

W. H. Smith has 25% of the book market and supports the 90-year-old Net Book Agreement, which lets a publisher set minimum prices for its books. The pact has survived 11 years of free-market reforms by Prime Minister Margaret Thatcher, who forced competition on lawyers, brewers and utilities.

No similar restrictions apply in the United States, but price-support arrangements exist in 10 of the 12 European Community nations, the Publishers Assn. said.

It said prices are lower in Britain than the United States, but Maher claims they are 50% higher.

“Possession,” by Booker Prize-winner A. S. Byatt, sells in Britain for 13.95 pounds ($27.48) and the full price in the United States is $22.95. When Pentos marked the book down to 10.45 pounds ($20.59), Maher said, sales increased sevenfold.

Maher has threatened for nearly two years to defy the Net Book Agreement. He discounted some books last Christmas, but they were among the 5% of British titles published outside the voluntary agreement.

Last year, the Office of Fair Trading decided circumstances had not changed enough to warrant another review of price-fixing agreement. The Restrictive Practices Court decided in the 1960s that abolishing it would result in fewer bookshops, more limited stocks and higher prices.

David Shaw, a Conservative member of Parliament, calls the agreement “an absolute scandal,” but could not win support in the House of Commons for its abolition. Shaw said he will try again.

Ian Taylor, a director of the Publishers Assn., said the Net Book Agreement “provides a wide choice of books readily available to the public at reasonable prices compared with other developed countries.”

The average book price in 1987, the most recent year for which Taylor said figures were available, was 2.85 pounds in Britain and 3.48 pounds in the United States, using an exchange rate of $1.72 to the pound, Taylor said. The current exchange rate is about $1.97.

Major chains account for 40% of U.S. bookstore sales, which are expected to total $7.2 billion this year, the American Booksellers Assn. said. The United States has 11,000 bookshops.

The British association said it does not have comparable figures, but that two-thirds of Britain’s 5,000 to 7,000 stores are independent.