'Only supermarkets will benefit'

Senior figures in the publishing industry say the OFT has ignored
their warnings about the potential dangers to businesses of opening up
the distribution network.

Retailers, from corner shops to big
supermarkets, are currently forced to buy titles from one wholesaler
for a fixed price, as part of an agreement in which the wholesalers
promise to provide all shops with the full range of titles if they want
them.

This ensures that people living in rural areas or deprived
inner cities can still get access to small-circulation magazines and
newspapers which otherwise might not be stocked.

But in its
latest draft advice, the OFT said: “Retailers should be free to seek
better deals than those offered by the appointed wholesaler for their
territory.”The likelihood is that this would benefit big supermarket
chains such as Tesco, who could then negotiate better deals with
wholesalers, while independent newsagents would be squeezed out of the
market.

PPA chairman Nicholas Coleridge said: “As it stands this is an almost classically ill-judged ruling.

“In years to come it will be the subject of business school studies on a really daft piece of pointless legislation.

“It benefits absolutely nobody and would lead to tens of thousands of job losses.

“It’s one of those investigations that achieves nothing beyond providing work for those involved.

“But it ain’t over yet. We still hope good sense can prevail.”

The
chief executive of the PPA, Ian Locks, said: “We are disappointed
thatthe 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.

“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 unravelling the
current retail supply chain would benefit only the giant supermarkets.”

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