The Office of Fair Trading's decision to allow Amazon's purchase of its smaller competitor the Book Depository to go ahead threatens the future of bookselling, the Booksellers Association has said.

The OFT began its investigation into the deal in July, when a host of book industry bodies spoke out against the move, including the Publishers Association, the Booksellers Association , the Independent Publishers' Guild, the Bookseller Group and the Society of Authors.

On Wednesday, the OFT cleared the acquisition, saying there was "limited pre-merger competition" between the two websites, with Amazon's share of the online book market strong – it is estimated to be as high as 70% by experts – and the Book Depository accounting for between two and four per cent of online book retail. Post-merger, Amazon would continue to face "strong" competition from other online retailers, bricks and mortar booksellers and supermarkets when it came to bestsellers, said the OFT, while it would also face "competition and rivalry" on "deep range" titles from other online competitors and Amazon Marketplace sellers.

Founded in 2004, the Book Depository aims to sell "less of more" rather than "more of less", offering free shipping on its range of six million titles to more than 100 countries around the world. It claims to be Europe's fastest growing bookseller, and to be the UK's largest dedicated online bookseller.

Amelia Fletcher, OFT chief economist and decisionmaker for the case, admitted that "a number of concerns" had been raised by third parties, but that "following a thorough investigation we are satisfied that this small increment to Amazon's position does not raise competition issues" and would therefore not be referred to the Competition Commission.

"The evidence showed limited competitive constraint from the Book Depository which, in fact, has shown most growth and expansion in overseas markets rather than the UK," she said. "We concluded that the UK book market has a significant number of bestseller and deep-range suppliers both online and offline and that existing levels of competition will be preserved after the merger."

But Tim Godfray, chief executive of the Booksellers Association, called the decision "wrong", saying it would give Amazon "a complete stranglehold on the market", depleting Amazon's competitors still further and "hurtling us towards a monopoly situation".

"Amazon now has even more power to put its bookseller competitors out of business and, having done that, it will be in an excellent position to increase prices and/or reduce choice. It is good to have lots of different booksellers who operate and compete against each other in a market place offering consumers a choice of supplier, rather than having one dominant supplier with a stranglehold over the market," he said.

"Bookshops play an important cultural and community role on our high streets and they are already facing the toughest conditions in order to survive. The numbers of high-street bookshops are currently declining, producing – in effect – less competition for Amazon. The suggestion by the OFT in its judgement that sellers on Amazon Marketplace offer competition to Amazon when the latter takes a commission on every sale, is difficult to understand. Any deal that threatens their survival on the high street still further should receive proper scrutiny by the government and competition authorities."

Trade magazine the Bookseller also called the OFT's decision not to refer the deal "plainly … wrong". "The OFT is ignoring the 800lb gorilla in the room to study the pattern on the carpet," said editor Neill Denny. "British book retailers, and publishers, are now increasingly threatened by a competitor with almost limitless pockets, intent on customer acquisition at almost any cost. Amazon's range of secretive activities across the book trade threatens to gravely weaken one of Britain's most important creative industries, and the government does nothing."

Godfray called on the government and local authorities to recognise "that it is vital for the consumer and UK cultural life as a whole for bookshops to be cherished".