Book industry warns Harper competition review against scrapping parallel import restrictions

Members of the Australian book industry have spoken out against the Harper competition review’s  recommendation the federal government re-visit moves to relax restrictions on parallel importing, telling SmartCompany this morning another inquiry into the regulations would be “a waste of taxpayers’ money”.

While much of the public debate about the government’s “root and branch” competition review, chaired by economist Professor Ian Harper, has so far focused on the likely impact of competition law reform in sectors such as the grocery sector, any change to parallel import restrictions could be a game-changer for the book industry.

Under current arrangements, Australian book publishers have 30 days to establish their copyright in a particular book by making it available in Australia, and if copyright is established in that timeframe, book retailers are restricted from importing more than a single copy from overseas suppliers.

The arrangements, which were introduced in the early 1990s, also give publishers 90 days to resupply a title that goes out of stock.

The legislation has come under fire in recent years as the ease and availability of books from overseas retailers mean Australian consumers are much more aware of new release titles but can still wait up to 30 days to see the book in their local bookshop.

Removing parallel importing restrictions in the book industry was recommended by the Productivity Commission in 2009, but the government of the time decided to leave the legislation unchanged. The industry moved to informally change the arrangements by developing an industry code of conduct in 2012, which reduced the timeframe to 14 days for initial supply and 14 days for re-supply.

It’s for these reasons book publishers are hoping the government doesn’t take up the Harper review’s suggestion that the issue be revisited.

Louise Adler, chief executive of Melbourne University Publishing and president of Australian Publishers Association, told SmartCompany this morning another Productivity Commission enquiry into the regulations would be a drain on the taxpayers’ purse.

“The commission’s views are well-documented, it could hardly be viewed as an ‘independent body’ likely to form a view contrary to that expressed in the Competition Review draft policy,” says Adler.

“The issues surrounding parallel importation regulations have been rehearsed repeatedly and comprehensively over the years. Australian publishers and booksellers are working collaboratively and productively to ensure best practice operates in the interests of consumers to ensure speed to market is as efficient as possible and that pricing is robust and competitive.”

Henry Rosenbloom, publisher at Melbourne’s Scribe Publications, says it would be “very hard to believe a government would want to revisit” the issue, given it was so thoroughly examined in the past.

“I have no idea why they would want to pick it up again,” Rosenbloom told SmartCompany.

“My heart sinks to think we might have to go through that process again … it was incredibly draining and gruelling.”

While Rosenbloom says it may be the case that as a draft report, the Harper review has chosen to simply include every single item it could in this week’s report, he says there is still a “compelling argument” to maintain parallel import restrictions for the local book industry.

Adler agrees, saying the case study of a “rapidly declining” New Zealand book industry should “give pause to advocates of a ‘free market’”.

“The market has declined with every year since it was initiated – this year by 6.6% after a fall of over 10% last year,” she says.

“There have been no reductions in prices nor improvements in availability. Shops have closed, sales have all gone offshore to the US, all the major warehouses have closed, educational publishers have withdrawn and employment has fallen.”

Booksellers have traditionally been in favour of relaxing parallel importation restrictions but Jon Page, co-owner of Sydney’s Pages & Pages bookstore and immediate past president of the Australian Booksellers Association, was surprised to see parallel importation among the topics referenced by the review.

“I am not at all surprised that the issue of relaxing or removing parallel import restrictions has raised it’s head again as we saw what happened with the music industry under the last Coalition government – and where are all the music shops now?” Page told SmartCompany.

“[But] I am surprised it has been raised in relation to increasing competition.”

“In the current environment the removal of parallel import restrictions would do nothing to increase competition as Australian business, particularly in the book industry, cannot compete with the unfair postal rates that overseas businesses enjoy and to a lesser extent, the 10% GST advantage overseas business also enjoy.”

“As seen in the music industry here and the book industry in New Zealand, opening the market to overseas imports does not lead to increased competition, it lessens competition, as the local market suffers or is wiped out,” says Page.

Page says he hopes the review takes into account the “positive effects the voluntary 14/14 code of practice has had on the industry with nearly all books now being released in Australia simultaneously with overseas”.

But Rosenbloom is less glowing in his assessment of the voluntary code.

“I said at the time it was a crazy idea and I still think that,” he says.

“It makes sense if you are bringing out big books, [but] it makes no sense for mid-list books, for which you need access to the author for publicity.”

“It’s a good example of something that sounds good on the surface but not in practice,” says Rosenbloom, who says he has not received any negative feedback from booksellers or sales and distribution organisations who have had to wait up to 30 days for the local release of one of Scribe’s international titles.

“We’re doing a book next year which will have simultaneous release in America and the UK … but it’s a big book and you can do that because of the bigness of the book. There will be 10 others before that and after that which are mid-list.”