Dawson News has called for the Office of Fair Trading to re-examine the distribution of newspapers and magazines, just six months after the conclusion of a lengthy investigation into the sector.
The newspaper and magazine wholesaler this week sent a letter to MPs detailing its concerns after losing five major contracts in the space of six weeks – contracts worth more than 90% of its £690m turnover.
It claims a “duopoly” is being created in the sector, with rivals Menzies Distribution developing a stranglehold in the north and Smiths News dominating the south.
The duopoly would eliminate competition and leave newsagents unable to act against price rises and changes to their deliveries, Dawson Holdings chief executive Peter Harris said.
“We are the smallest of the three operators in this market and as the new contracts have been announced, in each case competition has been excluded,” he said. “If this continues to unfold we are concerned that there could be hugely damaging consequences.”
Last year the OFT decided against making major changes to the newspaper distribution market – a move Harris said had led some publishers to renew their contracts with wholesalers years ahead of the renewal date amid concern that retailers would be able to choose their own supplier.
“The contract decisions have contradicted the OFT¹s overall aim of introducing competition to the sector,” he said.
The news comes after Smiths News this week blamed “difficult market conditions” for a drop in pre-tax profits of 5% to £15.3m in the six months to 28 February.