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Last Updated: Thursday, 30 March 2006, 07:44 GMT 08:44 UK
Ottakar's deal gets green light
Ottakar's book store
HMV made its move on Ottakar's last summer
The Competition Commission has provisionally backed a takeover of bookshop chain Ottakar's by HMV.

Last year, Waterstone's owner HMV launched an offer, valuing the firm at 96.4m, but several independent book retailers voiced opposition to the bid.

But the commission said it did not believe a deal would result in a substantial lessening of competition.

It said a takeover was "not likely to affect book prices, range of titles offered or quality of service".

After a four-month enquiry the commission concluded that the threat of competition from supermarkets and online retailers such as Amazon would make sure book prices stayed low.

"Throughout the country there is growing competition from supermarkets and internet retailer in terms of both price and range," it added.

"So the merged company would have little ability to raise prices either on best-sellers or other titles."

Lapsed bid

HMV agreed a takeover with independent directors of Ottakar's last September, but the offer lapsed after the Office of Fair Trading (OFT) referred the deal for a full competition inquiry.

We're pleased rather than surprised at the decision

Given sharp declines in sales for High Street retailers HMV is expected to lower its bid if it still wants to secure a deal, possibly by as much as a third, analysts say.

The commission is consulting on these provisional findings for the statutory 21 days before publishing its final report by 22 May.

HMV plans to await the final verdict before deciding whether to table another offer.

"This is a vindication of our belief all along that there would be no lessening of competition, so we're pleased rather than surprised at the decision," a spokeswoman for HMV told Reuters.

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