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Attack on news margins adds to case for market investigation

15 July, 2011

Association of News Retailing (ANR) has renewed its call for a market investigation into the news industry after retailer margins on the Daily Mail were cut to 23.2% from 24.2%, meaning that retailers will benefit by only 0.66p per copy from a 5p price rise to consumers. This move comes alongside an increase in Carriage Service Charges by Smiths News of 4.8%.

ACS public affairs director Shane Brennan, speaking on behalf of ANR, said: “The combined effect of the decline percentage margin on the Daily Mail and the increase in Carriage Service Charges by Smiths News will hurt small shops. As their profitability from the news category declines, retailers have no choice of where to get wholesale supply because the competition authorities have granted an exemption to this industry from normal competition rules.

“This adds to the growing evidence for a market referral when the OFT conducts its scheduled review of this monopoly industry in September. The case for the news industry warranting special treatment is now out-dated, and this price rise shows that the current system is damaging to consumers as well as retailers.”

ANR is compiling its case to the OFT in advance of its review of the market, which it committed to holding after its last inquiry, in September 2009, found significant concerns with the industry that would be looked at again in two years’ time.