OFT issues new draft proposal on print distribution
LONDON - The Office of Fair Trading has said in a new draft proposal that it will not back down on plans to shake up newspaper and magazine distribution, having said earlier this year that it would rethink the issue.
The OFT has confirmed its stance that current arrangements for distributing newspapers and magazines are likely to harm consumer choice and would be difficult to justify in terms of competition law.
As part of the OFT's draft proposal in March, the government body argued that there should be a differential between the distribution of newspapers and magazines.
The OFT's argued that only newspapers merited an exemption from competition law because they have to be distributed overnight and that they should be distributed to any outlet that wished to stock them.
The OFT bowed to pressure and backed down on the proposal to treat the two print media differently as part of the review.
The government body renewed its investigation into competition law surrounding the stranglehold large distributors have in certain territories in the UK, effectively shutting down choice of distribution point, especially for smaller newsagents.
The OFT proposed stricter rules for magazine publishers who would not be open to the same freedoms, and would be restricted by distributors in specific territories.
In current agreements, a publisher often awards sole rights to an area to specific wholesalers, which means that retailers can not seek a better deal from a rival wholesaler, and the wholesaler is protected from competition and is effectively awarded a monopoly in each area.
John Fingleton, chief executive at the Office of Fair Trading, said: "It is important that this market, as any other, delivers choice, innovation and competitive prices for consumers. This draft opinion questions whether the current system of local monopolies provides sufficient competitive incentives to publishers and wholesalers.
"Parties must weigh the harmful effects of their agreements against any benefit they can identify. Today's draft opinion sets out the factors that the newspaper and magazine industry must take into account when assessing their agreements."
A final consultation process will now be enacted by the OFT lasting until September 1. A final opinion is likely to be published in the first quarter of 2007.
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