OFT Issues New Guidance for News Suppliers
The UK’s Office of Fair Trading ruled on October 22 that its rules governing magazine and newspaper distribution could be relaxed, and that it would not pass its review to the Competition Commission.
In 2006, the National Federation of Retail Newsagents made a request to the OFT to refer the magazine and newspaper distribution sector to the Competition Commission. The OFT reviewed the current practices and issued three publications.
The first publication provides guidance to help publishers, distributors and wholesalers discern for themselves whether newspaper and magazine distribution agreements comply with the Competition Act, which is the major source of competition policy in the UK. These distribution agreements provide “absolute territorial protection”, which grants wholesalers exclusive territories in which other wholesalers are prevented from selling to retailers.
For the sale of newspapers, the publication sets out several factors that may show that the distribution agreements benefit from their exemption under the Competition Act. However, magazines are much less time-sensitive than newspapers, which means there may be a greater scope for competition to develop in the distribution of magazines. The OFT recommended that the parties review their distribution agreements, taking into account the guidance provided in the publication.
The second publication issued by the OFT reviewed the National Newspapers Code of Practice, which was introduced in 1994 following concerns that wholesalers were refusing to supply new retail outlets if they considered an area was already adequately served. The Code requires wholesalers to supply all new retailers who agreed to minimum weekly purchases of newspapers. The review found that changes have taken place in the market since 1994, and greater commercial incentives to supply new retail outlets now exist. Therefore, the OFT recommended to the Secretary of State for Business Enterprise and Regulatory Reform, Lord Mandelson, that newspaper wholesalers should not be required to abide by the Code.
Finally, in its third publication, the OFT has temporarily decided not to refer the newspaper and magazine supply sector to the Competition Commission. Although the OFT found that certain factors met the statutory test to be referred, it ruled to exercise its discretion not to make a reference. One reason the OFT decided not to make a referral was it found that positive developments in the newspaper and magazine distribution market would most likely occur once the parties involved reviewed their distribution agreements. The OFT will come to a final decision regarding referral to the Competition Commission in early 2009.
The Periodical Publishers Association, the trade body of the publishers’ industry, welcomed the OFT’s protection for newspapers, but it argued that many magazines, particularly weekly magazines, were also time sensitive and therefore deserved protection as well.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
In 2006, the National Federation of Retail Newsagents made a request to the OFT to refer the magazine and newspaper distribution sector to the Competition Commission. The OFT reviewed the current practices and issued three publications.
The first publication provides guidance to help publishers, distributors and wholesalers discern for themselves whether newspaper and magazine distribution agreements comply with the Competition Act, which is the major source of competition policy in the UK. These distribution agreements provide “absolute territorial protection”, which grants wholesalers exclusive territories in which other wholesalers are prevented from selling to retailers.
For the sale of newspapers, the publication sets out several factors that may show that the distribution agreements benefit from their exemption under the Competition Act. However, magazines are much less time-sensitive than newspapers, which means there may be a greater scope for competition to develop in the distribution of magazines. The OFT recommended that the parties review their distribution agreements, taking into account the guidance provided in the publication.
The second publication issued by the OFT reviewed the National Newspapers Code of Practice, which was introduced in 1994 following concerns that wholesalers were refusing to supply new retail outlets if they considered an area was already adequately served. The Code requires wholesalers to supply all new retailers who agreed to minimum weekly purchases of newspapers. The review found that changes have taken place in the market since 1994, and greater commercial incentives to supply new retail outlets now exist. Therefore, the OFT recommended to the Secretary of State for Business Enterprise and Regulatory Reform, Lord Mandelson, that newspaper wholesalers should not be required to abide by the Code.
Finally, in its third publication, the OFT has temporarily decided not to refer the newspaper and magazine supply sector to the Competition Commission. Although the OFT found that certain factors met the statutory test to be referred, it ruled to exercise its discretion not to make a reference. One reason the OFT decided not to make a referral was it found that positive developments in the newspaper and magazine distribution market would most likely occur once the parties involved reviewed their distribution agreements. The OFT will come to a final decision regarding referral to the Competition Commission in early 2009.
The Periodical Publishers Association, the trade body of the publishers’ industry, welcomed the OFT’s protection for newspapers, but it argued that many magazines, particularly weekly magazines, were also time sensitive and therefore deserved protection as well.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: eu competition law, eu law, european antitrust lawsuits, magazines, newspaper
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