ACS

ANR Leads Fight for Industry Action to Back OFT’s Words

28/09/09

The Association of News Retailing (ANR) has pledged to hold the Office of Fair Trading to its commitment to review the newspaper and magazine industry in two years time if significant changes are not made to the way the industry works. ANR will be ensuring that retailers gain more control on crucial issues such as copy allocation and choice of supply.

ANR Managing Director John Lennon said: “After further analysis of the OFT’s decision we are pleased to see that they recognise our concerns regarding the distribution and wholesaling of magazines, and that as a result they have refused to give the industry a clean bill of health.”

The OFT stated that if its concerns are not addressed, they will “consider, after a period of two years following this decision, whether to undertake a short update review of the newspaper and magazine distribution sector in relation to the features examined in this decision”.

Concerns highlighted by ANR which the OFT reflected in its report last week include (with direct quotes from the OFT report):

• the negative effect that publisher control was having on the supply chain and in particular the detrimental effect it was having on retailers’ ability to serve the consumer: “the OFT considers that there is significant scope, in the absence of such a high degree of publisher control over the distribution process, for retailers to differentiate their magazine offers and for wholesalers to respond to more individualised retailer demands…”

• copy allocation, and the need for greater retailer influence over the allocation process: “publisher copy allocation limits the degree to which a retailer can differentiate its offer from other retailers… and competition between local retailers can be restricted”.

• the relationship between magazine publishers and wholesalers which operates against the interest of retailers, it was, “not clear that an ordering system managed by wholesalers could result in more effective retailer influence over copy allocation”. The OFT recognised that wholesalers play an important part in the supply chain but state that “this need not be at the expense of the retailers influence over the range and number of titles they stock”.

• the encouragement of greater competition in magazines distribution including passive sales: the success of, “alternative supply via passive sales and/or national models of distribution will be particularly relevant in the context of any assessment of copy allocation and [magazine] publisher-led distribution…” in two years time.

• more frequent tendering for wholesale areas – “ideally more frequent than every five years” which is the current norm – with greater retail involvement “consulting retailers before future tender rounds, would enable retailers’ comments and concerns to be taken into account…”. Publishers should also make greater use of parallel tenders as it “would enable competing wholesalers to bid for a sufficient number of contracts at once to overcome any incumbency advantage held by another wholesaler”.

• Carriage Service Charges – the OFT state publishers should be “more readily aware of changes in CSC’s”

• the need for a self regulatory process “including mechanisms for redress” that “address the features of the market which fall within the statutory test for a reference to the CC”

• industry best practice being adopted that “could enable the newspaper and magazine supply chains to work more effectively into the future. In addition, the wider adoption of this best practice could address some of the concerns raised by certain retailers.”

Mr Lennon continued: “It is clear that the OFT agree that those retailers who want to manage their own magazine supplies should be able to, and ANR will ensure that publisher and wholesalers respond to these retailers’ needs. It is our role to make sure that the whole industry responds to the very clear message being sent by the OFT about why, how, and how quickly the industry has to change. If in two years time this change has not taken place, the OFT will have to mount a full inquiry into the industry – this time bringing about real change to support retailers and consumers.”

Mr Lennon also confirmed that ANR were working within JIG to create a meaningful retailer charter that will properly address retailer issues and achieve the desires set out by the OFT for an effective industry best practice agreement.