The NFRN says: “Whilst we at the NFRN have nothing but respect for Mike Newman, Chairman of the Newspaper Publishers Association Circulation Executive, we must take issue with his comments as reported in Media Week, in which he claimed that the arguments put forward by the NFRN for an industry referral to the Competition Commission for a full market investigation “carried little weight”.
Mr Newman added: "Those in the publishing and wholesale industries would argue that very little has changed in the last two years."
But isn’t that the point? Nothing has changed. At least nothing for the better, and from a retailers’ perspective, in many areas, things have become worse.
Let us look at the reality. The OFT expressed considerable concern about the exclusive distribution arrangements to retail through two monopoly wholesalers that enjoy exclusive contracts in large territorial areas, and said that “passive selling” should be introduced for magazines. So how many of the 54,000 retailers have benefitted by being able to shift their magazine supply to a wholesaler of choice? The answer? Not more than a few hundred at most – so that has done nothing to address the endemic problems associated with having a monopoly supply arrangement.
Publishers would ensure that carriage charges from wholesalers would not become excessive. Any sign of publishers imposing any restraint on that? Not that we’ve seen. It certainly hasn’t stopped Smiths News from hiking up their carriage charges by a further 4.86%, not to mention the rises already introduced by Menzies Distribution and NIDL over the past two years.
Publishers would take a greater interest in the quality of service that wholesalers provide to retailers. Not much sign of publisher intervention here either.
The New Entrant Code of Practice was no longer required because carriage charges had risen to such an extent in recent years that wholesalers no longer needed the Minimum Entry Level criteria. Really? In that case why have Smiths News and Menzies Distribution introduced their own new entry criteria that still involves a Minimum Financial outlay from the retailer. And as both wholesalers treat this differently, it is now a post-code lottery in how new entrants are treated.
The OFT also gave a clear warning shot across the bows to publishers regarding printed cover prices being a fixed price – being one of the reasons why a referral to the Competition Commission was justified. What have publishers done since? There have been a number of examples in the past two years in which publishers continue to abuse their control of cover prices by slicing the margin due to retailers.
And Mike Newman says that our case for a referral to the Competition Commission “carries little weight”. Doesn’t this just confirm how out of touch publishers are with the views and concerns of retailers? Retailers are not looking to the Competition Authorities to interfere in our industry just for the heck of it – they are simply looking for a fair deal!
But, if the supply chain believes it is still OK to exploit retailers rather than support them, where else have retailers got to go?
Unless publishers have read a different OFT report than us, we believe that the OFT’s intention was that there SHOULD be some positive change as a result of its recommendations. In that case, if Mike Newman believes that very little has changed in the last two years, doesn’t that then justify a case for a referral?”
