OK for newspaper distribution agreements

NEWSPAPER groups and their wholesale distributors breathed a collective sigh of relief today as the Office of Fair Trading (OFT) said current arrangements to get papers to retailers are not anti-competitive.

However, the promise of an extended investigation into the distribution of magazines sent shares in the major wholesalers down with the promise of a further period of uncertainty.

Newspapers and magazines are currently distributed via exclusive territorial agreements. These, say newspaper owners and wholesalers, ensure a 'universal supply' of papers to all retailers, instead of distributors just concentrating on big supermarkets groups rather than corner shops.

However, European Union directives and the UK's new Competition Act threatened to rule such arrangements as anti-competitive - a threat which suggested the future of thousands of small newsagents might be in jeopardy.

But the OFT today said it has 'provisionally concluded that current distribution agreements are likely to be compatible with the Competition Act'.

Shares in WH Smith, the country's biggest paper and magazine distributor slipped 3½p to 359. Its major rival, John Menzies. saw its shares dip 5¾p to 594¼p.