OFT clears newspaper distribution
LONDON (Reuters) - The consumer watchdog said it would not refer magazine and newspaper distributors to the Competition Commission after new deals were struck that could benefit consumers, but left the door open for a further review.
In a statement on Thursday the Office of Fair Trading (OFT) cited publishers retendering distribution agreements and the exit of Dawson Holdings Plc (DWN.L) from the sector and said there was a reasonable chance of further market changes.
"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 added.
In October 2008, following an investigation requested by an association of retail newsagents, the OFT published an opinion saying there could be scope for more competition in the newspaper and magazine distribution market.
The review prompted Dawson, once the UK's third-largest wholesaler, to exit the market, with Dawson's Finance Director Hugh Cawley saying the OFT's decision was a significant factor in the loss of business to larger rivals.
Earlier this year, after losing several distribution agreements to Smiths News Plc (SNWS.L) and John Menzies (MNZS.L), Dawson sold parts of its collapsed distribution business to Smiths and Menzies.
In August, two other Dawson subsidiaries were placed into administration.
"What matters to consumers is being able to get newspapers and magazines where and when they want them, at competitive prices," said OFT Director Louis Christofides in Thursday's decision statement.
"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."
Shares in Smiths were up 1.5 percent by 8:44 a.m., paring earlier gains, while shares in Menzies were down 2.5 percent.
(Reporting by Catherine Bosley; Editing by Rosalba O'Brien)
