Magazine Distribution Faces Shakeup Over New Laws

Britain’s magazine industry faces a radical shake up following the Office of Fair Trading’s decision yesterday that its distribution arrangements were anti-competitive.

The OFT ruled that existing distribution agreements are not compatible with existing competition law, a decision that could lead to a legal challenge from 1 May, when the Department of Trade and Industry’s vertical agreement exclusion order runs out.

The decision was made by the OFT because exclusive regional distribution arrangements between magazine publishers and large-scale wholesalers such as WH Smith and John Menzies are likely to contravene competition regulations by excluding rival wholesalers from supplying specific retailers outside their own area.

According to the Periodical Publishers Association, the whole system of magazine distribution in Britain could now unravel as the legal status of exclusive territories is undermined. This could leave up to a third of the country without reasonable access to magazines, the PPA stated, with “at least a thousand magazine titles disappearing”.

The PPA goes on to warn that rural areas are likely to be the hardest hit, a situation which has spurred a succession of MPs representing remote constituencies to write to the secretary of state for trade and industry, Patricia Hewitt, to voice their concerns in the past few weeks.

In the latest letter Michael Connarty, Labour MP for Falkirk East, pointed out that any changes would not only threaten indigenous publishers but also result in more economic pressure on already fragile rural communities and consumers.

The changes will not affect newspaper publishers, however, due to the time-sensitive nature of their distribution arrangements. The OFT states that exemption could be claimed by newspaper publishers as the new laws could make distribution to remote areas of Britain uneconomic or impossible given the applicable time constraints.

The OFT will announce its final conclusions next month, with a final verdict on the legalities of the nation’s magazine distribution business expected by the beginning of May, following a consultation process with the industry.

Office of Fair Trading: 08457 22 44 99 www.oft.gov.uk PPA: 020 7404 4166 www.ppa.co.uk

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