OFT and publishers dispute distribution

Magazine publishers were enraged by the Office of Fair Trading's insistence on reforming the industry's distribution arrangements.

The OFT published a draft opinion last week, expanding on the views it outlined in February. It said the distribution system currently in place is anti-competitive and could be illegal.

The existing system gives wholesalers exclusive rights to retailers in certain geographical areas. The newsagent chain Menzies, for example, has a monopoly across the whole of Scotland. It has to provide magazines to all of the retailers in this area.

The OFT has recommended an end to these territorial monopolies, giving retailers the freedom to choose wholesalers on the other side of the country to serve them.

However, if retailers use wholesalers based miles away, publishers warn that carriage charges will go up. This could ultimately drive up to 12,000 independent newsagents (who will have to pay these increased charges) out of business.

Without independent retailers, who sell specialist magazines, publishers warn that up to 1,000 titles could also face closure.

The OFT will publish a final opinion in the summer following a further four-month period of consultation.