Publishers Claim Victory after U-Turn by OFT on Distribution
Shah, Saeed, The Independent (London, England)
The Office of Fair Trading has abandoned its plans to overhaul magazine distribution, in a victory for publishers and small shopkeepers who had campaigned to keep the current system.
The OFT, which said last year that the regional monopolies enjoyed by magazine wholesalers were anti-competitive, said yesterday it would have to look again at the issue.
The competition regulator will publish a new opinion, at the end of May, which will be "materially different" from its previous view on the issue. It was the second major U-turn within a week by the OFT. Last week it ordered an investigation of the big four supermarkets, after initially resisting the call for an inquiry, after the threat of a legal challenge from the Association of Convenience Stores.
Magazines and newspapers are distributed under an arrangement whereby a wholesaler has the exclusive right to serve a given area. Normally such monopolistic practices are against the law. The OFT said in February last year, in a "preliminary" opinion, and then repeated in a "draft" finding in May 2005, that while newspapers could continue with this system, because of the extreme time sensitivity of the product, it could not be justified for magazines. "Retailers should be free to seek better deals than those offered by the appointed wholesaler for their territory," the OFT said in May last year.
The subject was then put to consultation. However, the final statement from the regulator, which was expected later in 2005 to reiterate the OFT's position, mysteriously never appeared.
Then in October, there was a change in the top leadership of the competition watchdog, with Sir John Vickers replaced by a new chairman, Philip Collins, and a new chief executive, John Fingleton, who ordered an internal review of the decision. That review culminated in a fresh inquiry yesterday, which will be followed by another consultation exercise.
Lord Heseltine, the Tory grandee and chairman of the publisher Haymarket, who led a campaign of publishers, independent news agents and wholesalers, against the original OFT position, gave a "cautious welcome" to the latest development. …