By Bill Wilson
BBC News business reporter |
  It is claimed supplies of magazines to some outlets may suffer |
The viability of hundreds of small newsagents and publications could be at stake following meetings this week to discuss the future of newspaper and magazine distribution in the UK .
The Office of Fair Trading (OFT) believes the current arrangements - which give wholesalers regional monopolies in return to delivering to all outlets at the same price - break EU anti-competition regulations.
In a preliminary decision the OFT has ruled the present arrangement is suitable for newspaper distribution, but not for magazines.
 | Newspaper/magazine distribution UK split into 100 distribution areas Distribution guaranteed if more than �200 a week in sales News outlets up from 45,000 in 1993 to 54,000 now Research quoted by PPA says the number may be cut by 20,000 on OFT ruling PPA fears 1,000 magazines could face closure |
The OFT will make a final decision by late summer but critics fear it could mean the death knell for rural newsagents and small publications.
"We have been talking to various industry bodies and are working towards a final announcement," a spokesman said.
"On the evidence placed before us, our legal view is that the contracts agreement between newspaper publishers and wholesale newspaper suppliers are likely to meet the conditions for competition exemption.
"But on magazines we feel they will not be exempted from competition law, as the evidence before us does not show it brings economic benefits or helps the consumer."
An OFT document shows the number of independent wholesalers has reduced from 70 in 1993 to 22 today, with three wholesalers having a dominant role: WH Smith News, Menzies Distribution and Dawson News. Tender process
The OFT also notes that the current tender process "may not be working perfectly" because, when contracts to appoint wholesalers within an exclusive territory were re-tendered, in over 50% of territories they were uncontested.
But a coalition of groups fears if magazine distribution is opened to free competition then big magazine retailers, such as supermarkets, will take the opportunity to sign cheaper, exclusive, distribution deals with wholesalers.
 It appears newspapers could escape any OFT changes |
That, says the Periodicals Publishers Association (PPA), would leave independent news retailers to pay more for their smaller deliveries to more out-of-the-way places.
"The present arrangements work because they are the most economically efficient," says Toby Hicks of the PPA.
"It also benefits both retailers and consumers.
"However, if the change goes ahead then distributors can strike big national deals with the like of Tesco, and the small newsagents will be seen as 'second-tier' networks, which will be more expensive to serve as they will include more isolated areas."
He said the present system had seen news outlets grow from 45,000 in 1993 to 54,000 in 2005 because of its "guarantee of supply".
'Cherry picking'
A PPA delegation has recently met the OFT, following a meeting held between OFT and a group of magazine publishers, wholesalers and newspaper publishers.
As well as the PPA, organisations which fear change to the magazine distribution deals include the National Federation of Retail Newsagents, the Federation of Small Businesses, and New Economics Foundation.
|  We are working with the industry, we are not charging off and trying to bring about changes. It is part of an industry move forward |
FSB policy chairman John Walker argues that opening up wholesaling could lead to "cherry picking" of more profitable areas of distribution and would "further reinforce the disadvantaged position of small businesses in relation to supermarkets".
In 2000 Tesco tried to sign a separate distribution deal of its own with WH Smith.
 WH Smith News and Tesco investigated a national deal in 2000 |
Supermarkets Tesco, Asda, and Sainsbury's have all seen their share of the magazine sales market increase over the past five years.
The PPA fears under any new deal supermarkets like Tesco will only take the brand-leading magazine for a hobby like angling, rather than the three or four an independent retailer may take under the present arrangement.
It says 1,000 magazines could face closure due to lack of widespread distribution in any new system, as well as 20,000 outlets going to the wall.
However a Tesco spokesman said: "We are interested in the consumer and getting magazines they want, when they want.
"We are working with the industry, we are not charging off and trying to bring about changes. It is part of an industry move forward.
"It will be for the OFT to decide how the new distribution will be. Its job is to make sure change is good for everyone."
He said one of the things Tesco was working towards with distributors was towards a more "paperwork-free system".
'Positive for retailers'
The British Retail Consortium and Association of News Retailers, representing mid-sized newsagents, would also like to see some changes.
BRC Director General Kevin Hawkins says: "Any changes in the supply chain that bring about benefits for consumers, will also be positive for retailers."
And he said any changes to magazine distribution "which improve the availability of titles to the consumer, are to be commended".
However, the Campaign For Press and Broadcasting Freedom (CPBF) says: "The present system of distribution for the print media plays a crucial role in giving people across the UK the possibility of buying a range of newspapers and magazines."
It said this applied to rural and other isolated areas, as well as villages and other communities close to larger conurbations but with difficulties of easy transport access to them.
"Our concern is that this will be drastically affected if the OFT proposals are implemented."
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