Sir; We will continue the battle for flexibility in the newspaper and magazine supply chain and are seeking to redress abuses.
While it is alleged that supermarkets are abusing their dominant position, in the news industry the abuses are carried out further up the supply chain, but they also have a detrimental effect on community retailers.
Monopolies tend to result in high prices and poor service. Ultimately, customers suffer.
The OFT attributed the fact that wholesaler charges had risen faster than inflation while the service given to retailers had fallen to the lack of competition.
Because of their monopoly, wholesalers can tender cheaply to guarantee the business, knowing that retailers will make up any shortfall through unnecessary carriage charges. If you allow a monopolistic supplier to use its national buying power to undercut smaller regional wholesalers, the inevitable will happen - competition will be eliminated and costs will go up.
There is no difference between whether it’s Tesco, Asda or Sainsbury that is eliminating the competition or whether it is WHS, Menzies or Dawson News.
The three big magazine wholesalers are getting bigger, with the takeover of Chester Wholesale by Menzies further threatening the existence of many community retailers. There is an element of competition between supermarkets, but there is none between the big three wholesalers - many areas remain uncontested during the so-called competitive tender process.
In a competitive market companies have to operate efficiently or lose out to competitors. Will there be an incentive for wholesalers to improve efficiency to deliver better services and reduce costs for retailers, or will they use any savings to increase their profits?
The ANS, and the ACS, will continue to challenge this abuse.