With the French government's firm endorsement of Hachette's takeover of Vivendi Universal Publishing (VUP), independent book traders hold out little hope that the European Commission's antitrust authority will veto the arrangement. Nevertheless, three independent trade houses—Gallimard, Le Seuil and La Martinière—have indicated their intention to file a complaint.
Some days before the takeover was announced, the heads of 22 Paris publishing companies asked in an open letter to Hachette chairman Jean-Luc Lagardère to renounce his intention to buy VUP, so that they would not be obliged to appeal to antitrust authorities in France, Belgium and the European Commission—a lengthy process that "would be prejudicial to all of French publishing." They disclosed what they said would be the "true" state of affairs after a merger: a single entity controlling 70% of book distribution, 60% of mass market paperbacks and more than 80% of school book production.
In another open letter published in the French press, Anthony Cheetham, chief executive of the U.K.'s Orion Publishing Group, a Hachette affiliate, made the case for ownership by Hachette rather than by investment funds aiming for short-term profit. Orion had experienced five years of each type of ownership, he said, and could vouch for Hachette's long-term approach. For the moment, those French publishers who applaud VUP's choice of "a French solution"—and such publishers exist—have not gone public with their feelings.
The best information is that Vivendi chairman Jean-Rene Fourtou chose Hachette over competing bidders because of Hachette's association with the French investment bank Natexis, which offered to serve as guarantor, putting up the equivalent of $1 billion at once, thereby giving Vivendi the ready cash it desperately needs to meet debt payments. (Natexis also holds minority shares of Gallimard and La Martinière.) Moreover, the investment bank would be able to sell off those parts of VUP that would otherwise strengthen Hachette's monopoly position.
Hachette is part of the Lagardère Group, a conglomerate that has $13.3 billion in annual sales. Books account for some $920 million of that total. With the acquisition of VUP total book turnover could reach $1.9 billion.
