PPA concerned by OFT's news distribution proposals

The Periodical Publishers Association has accused the Office of Fair Trading of failing to take weekly magazines and highly time-sensitive titles into account in its newly published report on magazine and newspaper distribution.

The OFT recommended today that the rules governing magazine and newspaper distribution could be relaxed, and concluded that it does not intend to pass its review of the sector to the Competition Commission.

In its report, the OFT suggested that the current distribution arrangements for newspapers, unlike magazines, may benefit from exemption from competition law, and said that ‘positive market developments’could come about from self-regulation of distributors.

The OFT said that a key difference between newspapers and magazines was that magazine sales were ‘not subject to the same extreme time sensitivity as newspapers”, meaning that there may be greater scope for competition to develop in the distribution of magazines.

This compares with a system of absolute territorial protection (ATP) in newspapers – where wholesalers are granted exclusive territories in which other wholesalers are prevented from selling to retailers.

PPA chief executive Jonathan Shephard said the group welcomed the OFT’s suggestion for a self-regulatory approach to improve arrangements in the newspaper and magazine supply chain.

He said the PPA wouldl be happy to continue working with the industry towards a new code of conduct, but described the report as ‘something of a curate’s egg”.

Shephard said the OFT report failed to take into account the ‘value and volume of highly time-sensitive magazines’such as TV listings magazines, celebrity magazines and weekly news titles, which together make up a high proportion of total magazine volumes and values, running at more than half a billion copies each year.

He said: ‘Newspapers and magazines are delivered on a daily basis to 55,000 retail outlets in a distribution system which has evolved over time to meet the needs of the market.

“It ensures that the great majority of people have only a short journey to buy a newspaper or magazine.

‘Publishers will look carefully at the OFT’s opinion and will consider whether changes to the current arrangements should be made.

“The crucial factor is to preserve a cost-effective distribution system which ensures timely delivery of newspapers and magazines to every neighbourhood.”

The OFT report also proposed scrapping the National Newspapers Code of Practice, which was introduced in 1994 after concerns that wholesalers were refusing to supply new retailers if they thought an area was already adequately served.

The regulator said its review had found changes in the market since the code was introduced.

OFT chief executive John Fingleton said: “Being able to get newspapers and magazines where and when they want them, at keenly competitive prices, matters hugely to consumers.

“The OFT has brought together three strands of work which reflect the most detailed and thorough analysis of the sector done in recent years.

“We are recommending a release from regulatory restrictions, while the industry should now take a close look at its own arrangements.

“We hope that once it has done this, our work in this important sector will enable competition to deliver even better outcomes.”

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