OFT says magazine supply system is anti-competitive

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The Independent Online

Magazine and newspaper wholesalers have been dealt a blow by the Office of Fair Trading, which has decided that some of the industry's supply arrangements are likely to be anti-competitive and risk falling foul of the Competition Act.

Magazine and newspaper wholesalers have been dealt a blow by the Office of Fair Trading, which has decided that some of the industry's supply arrangements are likely to be anti-competitive and risk falling foul of the Competition Act.

The competition watchdog's opinion has angered wholesalers and publishing groups, which believe the economics of supplying titles across the country to every retailer, including small independents, could be seriously undermined.

The OFT has been looking at newspaper and magazine distribution since last year when the industry asked it to recommend to the Government a block exemption from competition law for its supply arrangements which give wholesalers regional monopolies.

Retailers in any particular area can only buy newspapers and magazines from a specific wholesaler and the existing arrangements also stop wholesalers from filling unsolicited orders placed by retailers in other regions. But the OFT said yesterday it would not be recommending a block exemption for the industry's arrangements. It said that in its opinion, exclusive supply arrangements for newspapers and magazines were acceptable but that for magazines "absolute territorial protection" which stops wholesalers filling unsolicited orders was anti-competitive.

"The OFT has found that this is likely to be anti-competitive and is unlikely to be necessary for the efficient functioning of the distribution system for magazines," it said.

Ian Locks, the chief executive of the Periodical Publishers Association, said: "We note the OFT has clearly recognised there are benefits to the system of exclusive wholesaler territories. It would be helpful for this principle to be recognised for magazine as well as newspaper distribution: they are distributed in the same way and by the same wholesalers - it would be uneconomic to try and separate them out."

Small retailers welcomed the OFT's opinion. The National Federation of Retail Newsagents (NFRN) said magazines had "ridden on the back of newspapers" and had no case for special treatment. Peter Wagg, its national president, said: "It is no use publishers moaning about OFT interference in their supply chain arrangements, since the current shape of the news industry is entirely of their own creation."

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