Acquisition of Archambault retail stores by Renaud-Bray

Position Statement

See the news releases of September 4, 2015 and July 23, 2015 that correspond to this position statement.

OTTAWA, September 29, 2015 — On September 2, 2015, the Bureau issued a No Action Letter (NAL) to Groupe Renaud‑Bray inc. (Renaud‑Bray) and Groupe Archambault inc. (Archambault) indicating that the Commissioner of Competition does not, at this time, intend to make an application under section 92 of the Competition Act in respect of the proposed acquisition. This was followed by the issuance of an information notice on September 4, 2015.

This statement summarizes the approachFootnote 1 taken by the Competition Bureau in its review of the proposed acquisition by a subsidiary of Renaud‑Bray of the retail assets of a division of Archambault pursuant to an Asset Purchase Agreement announced on May 19, 2015.

In the course of its review, the Bureau conducted interviews with numerous market participants, including writers, publishers, book distributors, competing bookstores, industry associations and public organizations involved in the book industry in Quebec, and sought comments from the general public.

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Through the transaction, Renaud‑Bray was proposing to acquire 14 Archambault bookstores and the Paragraphe English‑language bookstore, as well as their associated web operations, all located in Quebec. Renaud‑Bray owns and operates 30 bookstores, three liquidation outlet bookstores, and their associated websites in the province.

Since 1981, the Quebec book industry has operated under the regulatory framework established by the Loi sur le développement des entreprises québécoises dans le domaine du livre (commonly called "Bill 51") and the regulations thereunder. Bill 51 and its regulations establish certain terms of trade in the industry, and provide for an accreditation which is available to industry participants meeting certain minimum criteria at each principal level of the industry’s supply chain, including:

  1. publishers,
  2. distributors and
  3. bookstores.

Renaud-Bray and Archambault are the two largest book retailers in Quebec. Alternative book sellers in the province include more than 350 independent bookstores, approximately 30 school co‑op bookstores under the COOPSCO association, seven bookstores operated by Chapters/Indigo, large mass merchandisers, pharmacies and certain other small retail outlets. These various retailers acquire books from publishers, including the more than 300 publishers based in Quebec, which themselves publish manuscripts produced by authors. In order to facilitate their operations, publishers make use of the services of over 20 Quebec distributors, many of which perform a sales representation role, in addition to providing more traditional logistical services.


Relevant markets and market shares

In the course of its review, the Bureau analyzed the potential effects of the Proposed Transaction on both upstream and downstream markets, and more specifically on:

  1. the upstream sale of French‑language trade books (i.e. books intended for general readership) by Quebec publishers to accredited bookstores in the province; and
  2. the downstream retail sale of French-language trade books to consumers by accredited bookstores in Quebec.

Close to 200 bookstores in the province are accredited, each having met the accreditation criteria established by Bill 51, which include requirements relating to a minimum inventory size and book sales volume. The Bureau did not consider mass merchandisers, pharmacies or other miscellaneous retailers to be within the relevant markets analyzed, as they generally offer a very limited selection of titles as compared to accredited bookstores. In its analysis of retail sales, the Bureau considered both "bricks and mortar" and online sales of printed trade books. As sales of digital trade books (i.e. e‑books) are relatively limited in Quebec, the Bureau’s conclusions would not have changed regardless of whether the sale of French‑language e‑books was included in the relevant product markets. The relevant geographic market for the sale by Quebec‑based publishers of French‑language trade books to the parties and their competitors is the province of Quebec. Exports by Quebec‑based publishers are relatively modest and are not an effective substitute for selling books in the Quebec market. With regard to downstream trade book retail markets, while the Bureau has traditionally considered local markets in such analyses, the Bureau found that online sales of printed trade books have increased substantially in recent years. Information collected through the Bureau’s review, including the views of market participants and data obtained from the parties, indicates that the parties’ retail trade book discounts are generally consistently offered across their respective bookstore networks and do not vary in response to differing local competitive conditions. As such, while local markets were taken into account, the Bureau also considered a provincial market definition when examining the parties’ competitive presence as retailers of French‑language trade books.

Upstream effects

The Bureau’s investigation focused primarily on two potential upstream theories of harm:

  1. the potential impact of Renaud-Bray’s leverage of its increased post‑transaction volume of business on the number of titles produced or books sold by publishers; and
  2. a potential increase in Renaud‑Bray’s ability to extract higher rebates, or other more favourable trade terms from publishers, that could then be passed on to consumers in the form of higher suggested retail prices.

With regards to the potential impact of the transaction on the number of titles published or sold, many of the market participants contacted by the Bureau described an increasing trend in the number of titles being published in the industry. Given that it is often very difficult to predict whether a new title will succeed in the market, publishers are generally incentivized to produce a large number of titles in order to increase the likelihood that at least a few of the titles they publish will be commercially successful. The results of the Bureau’s investigation suggested that the wholesale price elasticity of publishing trade books is relatively low, making it unlikely that the number of titles would be reduced significantly as a result of the proposed transaction.

Furthermore, based on the information gathered through the Bureau’s review, a material increase in the suggested retail price of trade books on the part of publishers would not likely be profitable. Many of the market participants contacted were of the view that retail trade book prices could not be increased above their current level without causing a substantial reduction in the volume of sales, given that consumers are very price sensitive and demand for books has been decreasing. Market contacts therefore indicated that the current prices of books are already at or near the level the market can bear.

Downstream effects

In the market for the downstream sale of French-language trade books to consumers, the Bureau primarily investigated a horizontal theory of harm relating to a potential increase in Archambault’s retail prices. More specifically, as Renaud-Bray’s existing pricing strategy consists primarily of offering trade books at the suggested retail price established by publishers, the Bureau focused on the likelihood of a post‑merger reduction or elimination of Archambault’s retail discounts. The Bureau considered whether a sufficient proportion of the sales that Archambault would lose following the adoption of such a practice would accrue to Renaud-Bray, such that Renaud‑Bray would have an incentive post‑merger to eliminate or reduce Archambault’s existing discounts.

Various analyses were performed using transactional level data sourced from each of the parties’ 44 French‑language book stores as well as the exact location of the parties’ and their competitors’ bookstores, in order to assess the impact of competition on Archambault’s retail prices for trade books. The results were not conclusive and did not reveal that the presence of Renaud‑Bray or third‑party competing bookstores had an impact on Archambault’s pricing policies. The Bureau ultimately took into consideration the fact that numerous independent accredited bookstores will remain in the province of Quebec post‑transaction.


In coming to its decision to issue a NAL, in addition to the factors outlined above, the Bureau also considered the efficiencies submissions by Renaud-Bray suggesting that the proposed transaction is likely to bring about cognizable efficiencies.


In light of the above, the Bureau concluded that the proposed transaction is unlikely to result in a substantial lessening or prevention of competition in the purchase and retail sale of French-language trade books in Quebec. The Bureau has therefore issued a NAL to Renaud-Bray and Archambault, indicating that the Commissioner of Competition does not, at this time, intend to make an application under section 92 of the Competition Act in respect of the proposed acquisition.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.

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