President of UOKiK has not given her consent for the takeover of Merlin by NFI Empik. The transaction would impede the competition. Before issuing this decision, UOKiK carried out the biggest research among undertakings operating on the culture related products market

In order to protect competition from negative consequences of mergers and acquisitions, the law obliges undertakings to obtain the consent of the President of UOKiK before they perform the transactions. More specifically, the requirement refers to transactions regarding undertakings whose combined turnover in the preceding year exceeded EUR 1 billion worldwide or EUR 50 million in Poland.

The UOKIK is entitled to examine the market consequences of intended mergers and acquisitions and even block transactions which may distort competition. Having assessed a given transaction, the President of the Office may clear it, impose an obligation or prohibit it altogether.

NFI Empik manages capital group consisting of 45 companies, inter alia Empik salons, Smyk (stores offering products for children) as well as on-line store Empik.com. To-be-taken undertaking mainly deals with an on-line shop Merlin. Both NFI Empik and Merlin distribute culture related products (e.g. books, CD’s, DVD’s).

The formal notification was delivered to UOKiK in July 2010. NFI Empik asked for approval for the takeover of  Merlin. It was stated in the notification the transaction would consist in acquisition 60% of Merlin’s share capital and votes at Merlin’s general meeting of shareholders by NFI Empik.

After analyzing all the information gathered during proceedings, including market research, the President of the Office has not given her consent for the takeover of Merlin by NFI Empik. According to the Office, this transaction would lead to significant restriction of competition on the following markets: non-technical books* online retail market; music discs online retail market; non-technical books purchase market.  

The market research carried out by the Office showed that if the transaction was performed, both NFI Empik and Merlin would gain advantage over other entities operating on the same market. Moreover, their shattered competitors would obtain signicifantly lower shares in the market. Consequently, without pressure to compete, the concentrated entity would be able to act independently of book suppliers, publishing houses and other online shops offering music discs or non-technical publications.

According to the market research, a lot of non-technical books publishing houses are dependent on Empik. NFI Empik because of its market shares, wide sale network, strong brand, promotional activities may cause a book is a success or a failure.

Since 2004, it has been the sixth UOKiK’s decision prohibiting the concentration. President of UOKiK very rarely makes use of this possibility – only when the transaction may lead to a significant restriction of competition. In 2010 the President of UOKiK made 150 decisions concerning the issue – none of it was negative.

The decision is not final. NFI Empik may appeal to the Court of Competition and Consumer Protection.

At the same time we would like to inform you that information concerning all concentration proceedings carried out by UOKiK can be found on the Office’s website.

Additional information for the media:

Małgorzata Cieloch, Spokesperson for UOKiK

Pl. Powstańców Warszawy 1, 00-950 Warsaw
Tel. + 48 22 827 28 92, 55 60 106, 55 60 430
faks + 48 22 826 11 86
E-mail: malgorzata.cieloch@uokik.gov.pl

*non-technical books – eg. fiction, crime stories, cookbooks