Competition Bureau Files Application with Consent of Indigo and Chapters

Backgrounder

April 20 , 2002

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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

Superstore	Location	Address
Chapters	Strawberry Hill	12101 - 72nd Avenue, Suite 100 Surrey, British Columbia
Chapters	Richport Town Centre	Richport Town Centre 8171 Ackroyd Road Richmond, British Columbia

Alberta — two superstores (one Chapters, one Indigo)

Superstore	Location	Address
Chapters	Brick Plaza	9631 Macleod Trail South West Calgary, Alberta
Indigo	South Edmonton	1837 99 Street Edmonton, Alberta

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

Superstore	Location	Address
Chapters	Belleville	Quinte Mall 390 North Front Street Belleville, Ontario
Indigo	Kingston	259 Princess Street Kingston, Ontario
Mall Store	Location	Address
Smithbooks	Rideau Centre	Rideau Centre 50 Rideau Street Ottawa, Ontario

Greater Toronto Area

Superstore	Location	Address
Chapters	Oakville Town Centre	310 North Service Road West Oakville, Ontario
Indigo	Scarborough Town Centre	300 Borough Drive Scarborough, Ontario
Chapters	Runnymede Theatre	2223-2231 Bloor Street West Toronto, Ontario
Chapters	Yonge & Steeles	7040 - 7054 Yonge Street Toronto, Ontario
Indigo	Yorkdale	Yorkdale Shopping Centre 3401 Dufferin Street Toronto, Ontario
Chapters	Woodbridge	East Woodbridge Centre 3900 Highway #7, Unit 1 Woodbridge, Ontario
Mall Store	Location	Address
Coles	Burlington Mall	Burlington Mall 777 Guelph Line Burlington, Ontario
Coles	Eaton Sheridan Plan	Sheridan Place Sheridan Mall 2225 Erin Mills Parkway Mississauga, Ontario
Coles	East York Town Centre	East York Town Centre 45 Overlea Boulevard Toronto, Ontario
Coles	First Canadian Place	1 First Canadian Place Management Office Concourse Level Toronto, Ontario
Coles	Centrepointe Mall	Centrepointe Mall 6374 Yonge Street Willowdale, Ontario
Coles	Yonge & Sheppard	Sheppard Centre 4841 Yonge Street Willowdale, Ontario

Quebec — one Chapters superstore

Superstore	Location	Address
Chapters	Rockland Montreal	Centre Rockland 2305 Chemin Rockland Mont-Royal, Quebec

Quebec — three mall stores

Mall Store	Location	Address
SmithBooks	Carrefour Laval	Le Carrefour Laval 3003 Boulevard le Carrefour Laval, Quebec
SmithBooks	Place Ville Marie	Place Ville Marie Shopping Promenade 1 Place Ville Marie Montreal, Quebec
SmithBooks	Fairview Pointe Claire	Centre Fairview Pointe-Claire 6801 Trans-Canada Highway Pointe-Claire, Quebec

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.