Carsberg sends newspaper distribution to MMC

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The Independent Online
SIR BRYAN Carsberg, Director-General of Fair Trading, yesterday referred the issue of national newspaper distribution to the Monopolies and Mergers Commission.

Reversing a decision made only 11 months ago by Sir Bryan's predecessor, Sir Gordon Borrie, the Office of Fair Trading said that while issues within the industry had not changed substantially in that period, Sir Gordon's decision that the MMC did not need to investigate had been 'on the knife-edge'.

Sir Bryan, after fielding some more complaints from newspaper publishers, newsagents and MPs, reviewed the issue and decided there were competition questions that should be aired.

The MMC looked into the industry in 1976, concluding that it did not act against the public interest, while the OFT examined the matter in 1986 and last year.

Newspaper and magazine distribution is dominated by two companies, WH Smith and John Menzies, although there are three smaller local groups in the market - Surridge Dawson, Johnson's of Bath, and Turners. There are few areas in which any of these firms competes directly with the others.

The OFT said that it was concerned about barriers to entry within the market and the way in which wholesalers often refused to sell newspapers to some retailers.

'I always view cases of refusal to supply with concern,' Sir Bryan said.

Ranald Noel-Paton, managing director of Menzies, defended the decision not to supply papers to some distributors.

'The barriers for entry are entirely reasonable. There are guidelines for sale that have to be adhered to because newspapers are a surprisingly fragile product,' he said.

Keith Hawkins, corporate affairs director of WH Smith, said the group was convinced the MMC would clear the industry. 'We have no worries at all in defending our competition arrangements.'

It is understood that Sir Bryan is also reviewing some other recent decisions not to refer matters to the MMC.

Among those under consideration are the distribution of compact discs - which Sir Gordon decided did not need to be referred earlier this year - and the Net Book Agreement, by which publishers and bookshops set book prices. This was looked at by the OFT in 1989 and was the subject of three separate probes in the 1960s.

Both of these areas also concern WH Smith, which is a leading seller of CDs through its Our Price operation, and owns two of the UK's largest booksellers, WH Smith itself and Waterstone's.

Mr Hawkins said WH Smith was happy that its business practices would stand up to scrutiny by the MMC.