Competition Bureau Files Application with Consent of Indigo and Chapters

Backgrounder

April 20 , 2002

The following is further information regarding some of the measures included in the application for a Consent Order.

Assets

Assets to be offered for sale include 13 superstores, ten mall stores, one distribution centre, online assets, and three store brand names.

1. Stores: 13 superstores, of which nine are currently operated by Chapters and four by Indigo, and ten mall stores operated by Chapters, of which six operate under the Coles name and four under the SmithBooks brand names.

British Columbia

- two Chapters superstores

Alberta

- two superstores (one Chapters, one Indigo)

Ontario

- outside GTA: two superstores (one Indigo in Kingston, one Chapters in Belleville), one mall store (Ottawa)
- Greater Toronto Area: six superstores (four Chapters, two Indigo), six mall stores

Outside GTA

Greater Toronto Area

Quebec

- one Chapters superstore
- three mall stores

2. Distribution Facility: Indigo's distribution facility located at 6160 Kenway Drive, Mississauga, as long as Indigo has possession of the facility.
   
   
3. Online assets: The assets of Indigo Online, including any leasehold interest in equipment, software and portal agreements. This does not include the Indigo Online tradename, intellectual property rights, brand specific content and customer lists.
   
   
4. Up to three trade names: any single purchaser of some or all of the assets must be offered one of the following tradenames: "Classic Books", "Prospero" and "SmithBooks".

Other Measures

1. For a period of five years, the Parties (Trilogy, Chapters and Indigo) will not acquire (by ownership or operating arrangements) a retail bookstore outlet in any shopping centre or mall in which it already has an outlet. During this time, if the Parties have more than one outlet in a shopping centre or mall as a result of the merger, then the Parties are to reduce to one outlet with reasonable expedition.
   
   
2. For a period of five years, any existing restrictive covenants which would preclude other retail book outlets in the same mall or shopping centre will not be enforced by the Parties where a competing book retailer outlet has less than 3,000 square feet of space. During this time, the Parties will not renew or enter into new restrictive covenants against outlets with less than 8,000 square feet of space.
   
   
3. The Parties are not allowed to open new stores for a period of two years from the date of the Order, unless committed to do so before February, 2001.
   
   
4. For a period of five years, the Parties must notify the Commissioner if they propose to re-enter the business of third party wholesaling or distributing of trade books to unrelated entities in Canada, and the Commissioner may advise the Parties that they are required to sell their interest in such wholesaler or distributor. Nothing limits the ability of the Parties to distribute books or other products to their own stores.