This confirms the OFT's proposed decision not to make a reference, contained in its October 2008 consultation. A key reason for this was the developments benefiting consumers that could come about from industry parties self-assessing their distribution agreements following OFT competition guidance. Download the full OFT report.
Since October 2008, many publishers have retendered their distribution arrangements and awarded new contracts. Following this, Dawson News, previously the third largest UK wholesaler, exited the sector.
The OFT has considered the impact of this tender round, amongst other issues raised in its consultation, and believes that there remains a reasonable prospect of further market changes which could benefit consumers. In view of this, the OFT considers that it would not be feasible for the CC to obtain the requisite evidence at this point in time to properly assess how the supply chains are likely to evolve in the short term, and hence the impact and effectiveness of any remedies.
However, the OFT has not given the sector a clean bill of health - it has found that there are reasonable grounds for suspecting that some features of the newspaper and magazine distribution markets prevent, restrict or distort competition. It has identified examples of industry best-practice which, if adopted more widely, could further improve the effectiveness of competition. The OFT has specifically not ruled out the possibility of a further review of the sector in two years if it could bring further benefits for consumers.
Louis Christofides, OFT Director, said: “A clear majority of those responding to our consultation generally supported our view that we should not make a reference to the CC during this period of change in the sector.”
What matters to consumers is being able to get newspapers and magazines where and when they want them, at competitive prices. We understand that our decision comes at a difficult time for some newsagents. However, we would encourage firms to focus on responding to market changes and competing to bring positive developments for retailers and their customers unhampered by further investigation in the short term.”
