Woolworths may be forced to sell off Bertram Group, the books wholesaler that it bought in January, after a referral of the acquisition to the competition watchdog.

After difficulties at its stores, the referral is another blow for the high street group, which also operates as a wholesaler of CDs, DVDs and books through its EUK/THE division.

The investigation could take until September 14, until which time Woolworths will have to give undertakings to keep Bertram separate from THE, its other book wholesaling business, which it bought last September.

Provisional findings are expected by early August.

The Office of Fair Trading said that it had referred Woolworths’s acquisition of Bertram to the Competition Commission in relation to the wholesale supply of books to independent bookstores.

The fair trade watchdog said that the merger would result in just two competitors in the wholesaling book market, with a merged Woolworths/Bertram up against Gardner, each with more than 40 per cent of the market.

Vincent Smith, the senior director for competition at the OFT, said: “UK consumers spend some £360 million a year in independent bookstores and appear to do so largely because they value the fact that retailers stock a range of backlist and mid-list titles and offer specialist advice and service . . . Book wholesalers are the only cost-effective way for independent retailers to obtain the repeated, swift supply of small numbers of back-list and mid-list titles — rather than best-sellers — from multiple publishers. This is key to the quality and reliability of service that independent booksellers can provide.”

Woolworths said that it was “disappointed” by the referral. The retailer argues that independent bookshops are able to buy directly from publishers and so have plenty of choice when sourcing their books. A spokesman said that Woolworths had yet to calculate the financial impact of the referral.

Regulatory investigations can be costly in terms of hiring legal advice and seeking evidence. Analysts said that Woolworths may also have to sell Bertram at a loss if that course of action was demanded by the regulator. The regulator may impose other measures, such as a code of conduct, when dealing with smaller stores.

The Competition Commission said that the inquiry would be chaired by Diana Guy, who presided over last year’s investigation into the merger of the bookstore chains Waterstone’s and Ottakar’s.

Woolworths, which shocked the City in December with a pre-Christmas profit warning, has revealed that pre-tax profits for the year to February 3 had plunged 74 per cent to £16 million as its high street stores suffered from competition from supermarkets and from price deflation.

The wholesale distribution division has helped to support the company through its difficulties on the high street and so the regulatory inquiry will be a blow to Woolworths’ ambitions on this front.

Woolworths has also been building up EUK to counter the loss of its big contract with Tesco. The possibility of selling off Bertram, which it bought for £28.9 million, would derail the group’s fightback and also derail a potential demerger of the group.

Rose fails to lure well-paid Green

Terry Green, chief executive of clothing at Tesco, turned down an offer to become head of clothing at Marks & Spencer from his close friend Stuart Rose (Sarah Butler writes). Mr Green, who joined Tesco 18 months ago after Allders collapsed, is understood to have negotiated a pay rise from Britain’s biggest supermarket as part of a new deal on his contract.

Mr Rose and Mr Green have been friends since they worked for the Burton Group in the 1990s. One source joked that publicity surrounding the approach from his old friend had helped Mr Green to secure his pay rise.

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