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July 24, 2011 3:49 pm
Newsagents in the UK are calling on regulators to open a fresh investigation into a newspaper distribution market they maintain is “one-sided and draconian” and threatens their livelihoods.
The National Federation of Retail Newsagents complains that its more than 18,000 members are being squeezed by publishers via Smiths News and John Menzies, the companies that dominate the wholesale market.
The Office of Fair Trading concluded a review in September 2009 without referring the sector to the Competition Commission for investigation. But the regulator said at the time that it had “not given the sector a clean bill of health” and would consider another review in two years.
Another OFT inquiry, with the prospect of a Competition Commission referral, would be resisted by publishers and wholesalers, who argue that newsagents and consumers alike get a reasonable deal out of the present arrangements.
Mike Newman, chairman of the Newspaper Publishers’ Association’s circulation executive, said: “If you [the OFT] didn’t look at it two years ago, there’s no great reason to look at it now.
“To what extent are newsagents voting with their feet? There’s not an overall reduction in [the number of] newsagents. We would argue the industry still represents a profitable opportunity for retailers.”
The NFRN will on Monday launch a “press for reform” campaign, which it says has the backing of Adrian Sanders MP, a member of the House of Commons culture, media and sport committee.
David Daniel, trade relations manager at the NFRN, said publishers force “uneconomic contracts” on to the two dominant wholesalers, which “fuels them to go and get the rest of the money from the newsagents”.
Retailers were unable to choose between wholesalers, which have effective regional monopolies, and “things have got worse” since 2009 as a result of continued increases in charges.
“The phone-tapping scandal is symptomatic of the unethical way that some publishers go about operating their businesses, which is only limited by what they think they can get away with,” he said. “And that extends to how they treat their supply chain, and how retailers get treated.”
David McIntosh, executive director at Menzies Distribution, said: “We’ve been round this route many times with the NFRN. The last time round the OFT spent the best part of six or seven years at it.”
The OFT said that it had not ruled out another review. “The work that we do is determined by the likely impact on consumers but we are happy to listen to industry views. We’ll consider any submissions that are made to us,” it added.
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