ANR Cautiously Welcomes OFT Newspaper & Magazine Industry Findings
The ANR, the news arm of ACS, cautiously welcomes the Office of Fair Trading review of the newspaper and magazine industry, which offers areas of potential opportunity for retailers in respect of magazine distribution.
As predicted by ANR, in its guidance the OFT said it did not think it would refer the newspaper and magazine supply system to the Competition Commission.
However, while leaving the framework in place that governs the retailing of newspapers, the OFT called for "greater scope" for competition between wholesalers in magazine sales – a move that could liberalise the magazine market by removing the barriers restricting retailers ability to choose from other wholesalers. ANR welcomes this as an area for opportunity for its members.
Says John Lennon, Managing Director of ANR: “It is no surprise that the OFT has declined to refer the market to the Competition Commission, the changes that will undoubtedly take place as a response to the Opinion could create a substantial change in the market making any market review at this stage too complicated. Although, of course, if the expected changes do not take place then a referral in the future would be all the more likely.”
The recommendation of the OFT to remove the Minimum Entry Level (MEL) code, the obligation for wholesalers to supply any retailer who agreed to a net minimum weekly charge from a wholesaler, will be assessed by ANR.
Says John Lennon: “We need to further understand the ramifications of the removal of MEL. In the guidance the OFT has made a universal supply obligation an important part of the publishers’ assessment of the likely anti-competitive impact of their contracts with wholesalers. Without some form of universal supply obligation the contracts could well be illegal. We wait to see some indication from newspaper publishers’ on how they will satisfy this important requirement.”
The Opinion is now ‘live’, and the OFT is leaving it to publishers, distributors and wholesalers to decide whether the current system is compliant with competition law. There is no review period for the OFT Opinion. The Secretary of State has called for consultation on the Code recommendation. Parties have until 14 January 2009 to present their views.