OFT ruling paves way for rival free newspaper on the Tube

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The Independent Online

Media groups were last night considering launching a free evening newspaper for Londoners after the Office of Fair Trading (OFT) ended its dispute with the owners of the Daily Mail over distribution on the Tube.

Last year, Daily Mail & General Trust's Associated national newspaper division had offered to waive its rights to exclusive distribution of free papers at London Underground stations, in order to close a regulatory investigation into the distribution deal. Yesterday, the OFT accep-ted the arrangement, paving the way for a free rival to the London-based Evening Standard, which is also owned by Associated.

It is thought that Richard Desmond, the owner of the Daily Express, as well as News International and the Guardian Media Group, are seriously considering a launch. None of the three would go into details last night.

Associated retains its morning monopoly, meaning that the free Metro paper will continue, but it opens up the evening slot to competitors.

The OFT ruled last year that Associated's sole right to the London Underground was against the public interest. Its investigation was sparked by complaints from Mr Desmond that the Associated deal, which was to run until 2010, was unfair.

By reaching a compromise with the OFT, Associated avoids any further punishment from the watchdog. It also protects the Metro franchise, which is to be extended to Liverpool and Cardiff. The company plans to increase Metro's circulation in London by 50,000 to 550,000 each day. In total, Associated believes Metro will have a national circulation of 1.1 million in 16 cities. Kevin Beatty, Associated's managing director, said the OFT had made "no findings against the company". The OFT has given Associated until 12 April to "unconditionally and irrevocably" give up its exclusive rights with the train companies.

The watchdog found that the 24-hour exclusivity of Associated's deals with Tube and train operators "went beyond what could be objectively justified". The newspaper group has agreed to open up its distribution racks in train and Tube stations to rivals.

In theory, a new paper could be available by next month. Before then, newspaper groups must bid for rights from London Underground and Network Rail.

Associated can still bid for these rights but made no comment yesterday on its intentions. It is thought to have paid nearly £5m for the original rights.

Ken Livingstone, the London Mayor who has had a long-running battle with Associated, said: "I welcome this decision. It will clear the way for a free afternoon newspaper to be published and distributed on the Tube. London Underground are ready to start a tender process without delay."