OFT distribution shake-up could cause 12,000 newsagents to close

The Office of Fair Trading will on Wednesday open up the market for newspaper and magazine distribution, in a move which publishers claim could lead to the closure of up to 12,000 newsagents.

The Office of Fair Trading will on Wednesday open up the market for newspaper and magazine distribution, in a move which publishers claim could lead to the closure of up to 12,000 newsagents.

The ruling will allow retailers to sign contracts with whichever news wholesaler they like - by breaking the existing practice of territorial distribution.

But publishers and wholesalers claim that the proposals will make it uneconomic to deliver newspapers and magazines to newsagents in remote parts of the country.

The OFT is expected to make two judgements. On magazine distribution, it will call for a free and open market. For newspapers, it will rule that the market should be opened up but protections should be put in place to ensure that everyone in the country can buy a paper. The ruling will come after nearly two years of wrangling between retailers, wholesalers, publishers and the Government over how the distribution system should be reformed.

A report written by Professor Paul Dobson of Loughborough University, which was commissioned by some of Britain's largest publishers, revealed that a free market in news distribution would increase wholesaling costs by up to 25 per cent. Professor Dobson argued that these costs would be passed on to smaller newsagents, leading to the closure of between 9,000 and 12,000.

Ian Locks, chief executive of the Periodical Publishers Association, said: "We don't think that newspapers and magazines should be treated in the same way as baked beans. We need to protect diversity of opinion, and simply handing the decision over the future of the industry to the competition authorities is not sufficient. There should be a cultural consideration."

While the changes to the newspaper delivery system won't be as radical, Britain's newspaper groups are planning to stand firm with the magazine publishers.

Mike Newman, chairman of the executive committee at the Newspaper Publishers Association, said: "We would like to see newspaper and magazines enjoined in the same arrangements."

He added that because wholesalers deliver newspapers and magazines together, then having separate distribution rules for the two would "damage the economies of supply".

The newspaper and magazine groups are planning to reject the OFT ruling and take their case back to the Department of Trade and Industry.

One newspaper executive, who asked not to be named, said: "With a general election looming, we could make this very political."