OFT could make U-turn on future of distribution

By Alyson Fixter The Office of Fair Trading (OFT) has scrapped its original draft opinion on the future of magazine distribution, in what could turn out to be a dramatic U-turn by the watchdog.

The OFT said on Monday that its new draft opinion on whether the supply should be opened up to competition would appear by the end of May — a full year after its first, controversial, draft.

The watchdog had originally said regional monopolies and their connected universal distribution system should end, but pressure groups warned that thousands of niche magazines and small newsagents could close as a result, allowing supermarkets too much say in which publications reached the shelves.

The OFT’s announcement followed speculation last weekend that the Department of Trade and Industry (DTI) was considering taking control of the issue amid increasing anger from publishers, who have been waiting more than two years for a solution.

The OFT statement said: "This decision follows an internal review, requested by senior management in the light of consultation responses received following the provisional conclusions set out in the draft opinion published last year.

"The OFT will publish its new draft opinion, setting out its provisional views and the reasons for them, by the end of May 2006."

The decision follows the departure of former OFT chairman and CEO John Vickers at the end of last year. It was believed then that Vickers might not want to be connected with a U-turn, but his successors, chairman John Fingleton and CEO Philip Collins, might be more sympathetic to the industry.

Meanwhile, Hornchurch Conservative MP James Brokenshire has put more pressure on the Government over the issue by signing a Parliamentary Early Day Motion urging ministers to protect the current universal distribution system.

The move also follows the OFT’s referral of the grocery market to the Competition Commission as part of the ongoing debate about the power of the supermarkets.

PPA chief executive Ian Locks said: "Just a few months ago, the OFT was on the brink of a decision that could have been seriously damaging to the industry.

"Despite the fact the OFT investigation has now entered its third year, the industry would still prefer a good decision rather than a ‘quick’ one.

"The fact that the OFT listened to the industry’s arguments and is now engaging in a fresh review has to be welcomed.

If this leads to future certainty for press distribution, then the further delay will have been worthwhile."

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