Game of 'chicken' may cost news trade dear

Big chains could get better deals

Changes to newspaper and magazine distribution rules that could lead to the closure of thousands of newsagents have been delayed by the Government while the industry seeks a compromise.

Publishers and newsagents have been given one month by the Department of Trade and Industry to thrash out a deal to save the “vertical agreements” between publishers and distributors.

The agreements currently in place give wholesalers local monopolies, but state that they must service every news outlet.

The DTI plans to amend the Competition Act to sweep away the legal loophole which allows these vertical agreements, unless the industry can negotiate a new exemption.

According to academic research, a free market in newspaper and magazine distribution could lead to 15,000 of the UK’s 54,000 newspaper outlets closing.

It is feared that small and geographically remote newsagents could be dropped altogether by distributors and the big chains could negotiate better deals for themselves.

Talks held last week between DTI officials and representatives from the news trade broke down, partly because of dissent from the National Federation of Retail Newsagents and the Association of News Retailing.

The NFRN has argued that the current set-up allows the monopoly wholesalers to impose excessive charges on newsagents and exert too much control on them.

Newspaper Publishers Association director Steve Oram said: “In any exclusive territory agreement there’s scope for abuse in terms of the quality of service and the charge for that service. Work has been done to overcome this.

“The NFRN is playing a complex game of trying to gain benefits for its members by threatening to commit suicide.”

Daily Mail circulation director Mike Newman said: “In a worst-case scenario, the big newsagents would be able to screw additional benefits out of the system. The obligation that wholesalers currently have to service all retailers in an area would be removed and thousands of smaller retailers would face increased costs or find that a wholesaler might not be able to serve them at all.”

He said that, ultimately, newspaper circulations would be under threat.

The Periodical Publishers Association has voiced similar fears.

The first meeting between news trade representatives aimed at reaching a compromise was due to be held this week.

By Dominic Ponsford

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