Notes of Cases
| Published date | 01 November 1963 |
| DOI | http://doi.org/10.1111/j.1468-2230.1963.tb02236.x |
| Date | 01 November 1963 |
NOTES
OF
CASES
THE NET BOOK AGBEEMENT
IN
1899
a number of publishers agreed,
''
in the interest of the
booksellers, as urged by the majority of them and their represents
tiyes," to introduce resale price maintenance in respect of those
books which they individually chose to publish as
"
net
"
books.
The Net Book Agreement (N.B.A.) came into force the following
year. At first relatively few titles were published as net books, and
most
fiction
was excluded from the scheme until after the First
World War. The agreement was revised from time
to
time, most
recently in
1957.
It
is this agreement of
1957
which was found
by the Restrictive Practices Court not to be against the public
interest
*:
it
conferred specific and substantial benefits
on
book
buyers, and there was
"
no
detriment which needs
to
be
taken into
account for purposes of the tailpiece to the section [section
21
(1)
of the Restrictive Trade Practices Act,
19561
or,
if
there be any,
.
. .
it
is of insacient weight
"
(p.
827).
The court came to its general finding by the following route.
First, without the N.B.A. price-cutting of books by retailers would
be unavoidable. Secondly, price-cutting would
be
occasional and
selective.
''
We do not think that serious pricecutting would
be
otherwise than occasional, but there would, we feel
no
doubt,
be
occasions when price-cutting would occur
"
(pp.
812-818).
Thirdly,
stockholding booksellers (of which there was an estimated
750)
would lose business to specialist library suppliers in the supply of
books
to public libraries. Fourthly, the effects of the pricecutting
and the diversion of library business would be as follows:
"
The
number of stockholding booksellers
in
the country would
be
reduced.
The stocks held by the surviving stockholding booksellers would be
less extensive and less varied than at present. Although in rare
cases retail purchasers might be able to buy particular titles more
cheaply than
if
the agreement remained in force, the retail prices
of
most books would be higher. Fewer titles would
be
published,
and those which failed to find a publisher
.
.
.
would include works
of probable literary
or
scholastic value
''
(p.
822).
Gross margios
in bookselling would also be higher: booksellers would press for
higher margins and publishers
"
would find themselves compelled
1
Quoted from the text
of
the scheme proposed in
1899
by
the Publishers'
Association and accepted by the Associated Booksellers; reprodncad in Sir
Frederick Macmillan,
The
Net
Book
Agreement 1899
and
the
Book
War
2
Re
Net
Book
Agreement,
1957
(1969)
L.R.
3
R.P.
246.
All otherwise
unspecified page references
in
this
note
are
to
this
report
of
the
jud,gment.
691
1906-1908
(e)laEgOW
1984),
pp.
M.
692
THE
MODERN
LAW
REVIEW
VOL.
26
to offer increased discounts
”
(p. 316). These effects would be
injurious to the book-buying public and to booksellers; and libraries
also would not be better off without the agreement.
The court observed that
“
any view as to what will be likely to
happen
if
the agreement comes to an end is bound to be specula-
tive
”
because, owing to the long period of resale price maintenance
of books in this country, witnesses had to
“
base their forecasts
of
the future
on
assumptions unsupported by experience
or
recent
history
”
(p. 311). Noting that for this reason their assessment
of the effect of the removal
of
the agreement
on
book prices
was
‘‘
the most difficult part
of
the case,” the court said:
“
We
are
conscious that others might make a different assessment of what
is likely
”
(p.
323).
The purpose of this Note is to indicate the main
grounds on which the court’s assessment
of
the likely effects of the
abrogation of the N.B.A.
is
considered to be unconvincing. The
Note considers, first, the two riain analytical arguments under-
lying the judgment; then it reviews the Canadian experience
of
a
book trade without resale price maintenance (which figures
prominently in the judgment); finally, it reviews briefly some
aspects of the retailing of books in the United Kingdom before the
first
N.B.A. in 1900.
A
major component of the assessment presented in the judgment
is that the predicted sporadic and selective price-cutting would
increase the risks of stock-holding by booksellers who would, there-
fore, reduce their pre-publication and stock orders and also their
stocks (see esp. p. 314). Since many book-titles
or
classes
of
books would be susceptible to price-cutting-“ although we think
that
it
is unlikely that more than
a
small proportion
of
the titles
published would actually become the subjects
of
price-cutting
’)
(p.
314)-the uncertainty would be widespread. Caution on the
part of the booksellers would throw more of the risks of the trade
on to the publishers, who would react by printing smaller editions
(thereby raising costs per book) and by being less adventurous
about the publication of marginal books (marginal, that
is,
com-
mercially, not
in
terms of intrinsic merit).
The first point to note is that the court expected tremendous
ill effects to spring from an apparently trivial cause, occasional and
selective price-cutting. One would have thought that the likelihood
of serious effects would be related to the extent of the change
(k,
price competition) brought about by the removal of the agreement.
Instead, there is the prediction
of
a markedly asymmetrical com-
bination of an insignificant measure of price competition (conferring
negligible benefits on consumers) and dramatic and extensive ill
effects (materially damaging the interests of consumers).
If
price-
cutting were to be only sporadic and limited in extent, is it not
likely that the additional risks to booksellers in the aggregate would
be small, and would not disturb their practices significantly,
if
at
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