Rivals to sue WH Smith over distribution tactics

A publishing house will tomorrow take on the might of WH Smith, by attempting to sue the newsagent over its new magazine distribution system.

A publishing house will tomorrow take on the might of WH Smith, by attempting to sue the newsagent over its new magazine distribution system.

Bauer, publisher of Bella, TV Quick and Take a Break, plans to serve the writ on Monday morning, shattering the month-long truce between retailers, publishers and distributors.

And wholesaler John Menzies is also preparing to take legal action against WH Smith and the new distribution system it introduced on 2 October.

Bauer and John Menzies both claim lost revenue as a result of the system, that sparked a vicious industry slanging match.

The discord, rumbling since April, has already seen a string of legal threats; magazines being taken off retailers' shelves; complaints to the Office of Fair Trading; and discreet briefings of government ministers.

WH Smith News, the newsagent's wholesale distribution arm, has switched from supplying magazines on a local geographical basis to a national level. So far this is confined to its own stores, but Safeway is understood to be in advanced negotiations to sign up.

Alan Urry, MD of Bauer, said: "WH Smith is using strong-arm tactics to win business. We will test this in the courts."

Mr Urry said that as a result of the new system, its magazines are getting delivered to stores where it already has a contract with John Menzies. "In some areas we have been forced to break our contract with Menzies which runs until 2005," he said.

The legal case centres on the status of Bauer's contract with WH Smith. Bauer claims it's exclusive - preventing WH Smith from extending the scope of its distribution. But WH Smith disputes this.

A WH Smith spokeswoman said: "Our view is that we don't have an exclusive contract with Bauer, and at present we have not received any proceedings from Bauer."

The new developments have also put trade organisation Periodical Publishers Association (PPA) back on the attack after publicly stating a peace accord with WH Smith last month.

A PPA spokesman said: "WH Smith is breaking its contract and is using its wholesale muscle to get into the market. A consensus is developing... at odds with what WH Smith is doing."

John Menzies' potential legal action isn't as advanced as Bauer's. Over the last 10 days, the wholesaler and WH Smith have exchanged angry lawyers' letters. While both won't disclose details, a source close to the situation reveals John Menzies is concerned that WH Smith's new distribution plan is forcing publishers, like Bauer, to break contracts. John Menzies is expected to meet on Friday with its lawyer Peachey & Co to decide if it will sue WH Smith, represented by Herbert Smith.

The short-lived harmony will be further exacerbated by the Newspaper Publishers' Association. It plans to publish a follow up to its widely-quoted Dobson Report that claims the new system could force up to 12,000 small newsagents to close if extended to newspapers.