Industry groups have expressed their “strong and continuing concerns”
in response to the OFT’s draft opinion on newspaper and magazine
distribution.
 
In a joint statement, members of the Newspaper Publishers
Association (NPA), the Periodical Publishers Association (PPA) and the
Association of Newspaper & Magazine Wholesalers (ANMW) said:
“Ending the system of exclusive territories for magazine distribution,
by allowing retailers to source magazines from suppliers outside their
particular territories, would seriously undermine the economics of such
wholesaler territories for both magazine and newspaper distribution –
making the OFT’s approval for the latter of limited value.
 
“Newspaper
and magazine publishers and distributors are therefore sceptical of the
OFT’s suggestion that joint distribution arrangements could ‘continue
naturally’ without specific authorisation from the OFT.
“Previous analysis of the market undertaken by Professor Paul Dobson of
Loughborough University has shown that ending the current economies of
scale by stripping out magazines would increase the overall cost of
supply – and that the effects of such a change could lead to as many as
12,000 retailers exiting the market.
 
“Under the terms of the
Competition Act, the effect on the consumer is meant to be legally
relevant to the OFT’s analysis of the situation; however, as Professor
Dobson has said: ” I can see no benefit to consumers but rather
considerable consumer detriment if the current proposals are not
reassessed. This move will otherwise inevitably lead to consumers
facing higher prices and less choice. People living in rural and
socially deprived urban areas will be particularly hard hit when this
results in the closure of their local shop.”
 
Mike Newman, chairman of the NPA’s circulation executive, said:
“We believe that the OFT’s provisional view, if maintained in its final
opinion, would threaten the current near universal availability of news
and opinion in all parts of the country – even though the UK
competition authorities have previously recognised the benefits of
universal access to news and opinion in terms of the public interest.
We will be responding in detail to the OFT’s provisional opinion over
the next few weeks. “
 
Ian Locks, chief executive of the Periodical
Publishers Association, said:
“We are disappointed that the OFT has not yet recognised in its
provisional statement the immense damage we believe would be caused to
both newspapers and magazines through increased costs, reduced sales
and loss of choice for the consumer. “Newspapers and magazines clearly
compete for consumer spend and time, as well as advertising revenue and
personnel – and we believe the position currently being taken by the
OFT would seriously distort competition between important groups of
publishers in the marketplace. Magazine publishers look forward to
discussing their concerns with the OFT and we are still optimistic
that, before issuing any final opinion, the OFT will accept that
unraveling the current retail supply chain would benefit only the giant
supermarkets. “
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