Sunday, November 19, 2006

EXCLUSIVE - OFT could probe Newsquest's activities in Sussex

Thanks to an anonymous tipster Newsquestwatch has learned that the activities of Newsquest's Sussex operation, centred on the Brighton Argus, could be the subject of a probe by a competition watchdog.

This document reveals them story of the Lewes Life and Ucksfield Life, founded by businessman Terry Brannigan in 2003 in an area dominated by The Argus and Johnston's Sussex Express. He alleges Newsquest (in particular) acted againt competition law in the following ways;

(a) the cancellation of the intended print slot for the appellant’s publications (the
appellant having entered into an agreement with Newsquest in January 2003
to use Newsquest print facilities);
(b) the launch by Newsquest of a rival weekly free paper, the Uckfield Leader, to
target the circulation of the Uckfield Life;
(c) the offering of advertising space to the appellant’s customers either free or at
excessively low prices in return for an agreement not to advertise with Mr
Brannigan’s titles;
(d) targeting of the appellant’s means of distribution, in particular by pressurising
local newsagents not to stock the Lewes Life or the Uckfield Life; and
(e) attacking and denigrating the appellant’s reputation.
The appellant also alleges an agreement between Newsquest and Johnston not to compete
against each other in the Lewes and Brighton areas respectively.

Mr Brannigan, who was forced into personal bankrupcy by the failure of his titles, made complaints to the Office of Fair Trading at the time and was told that while 'further enquiries were justified' the OFT had 'insufficient resources' to carry them out.

After years of legal letters the OFT announced earlier this year that it would not be investigating Mr Brannigan's case. However, after an appeal to the Competition Appeal Tribunal, the OFT was told to take another look at the case. The OFT came back with

the OFT did not consider that the
complaint was an administrative priority for the OFT. The OFT also stated that the grounds
for suspecting an infringement of the Act were weak; that there was no clear evidence that
either Newsquest or Johnston are dominant in any market or that there were agreements
which could have an appreciable effect upon competition. The OFT took the view that much
of the alleged behaviour can be justified as a vigorous competitive response and was of too
short a duration to pose a threat to serious competition,

But Mr Brannigan appealed again, and the tribunal has given him a further 28 days to prepare his case. It could get interesting.

Now, an important caveat here - this is a long way off getting to court. Even if the OFT is forced to investigate, it doesn't exactly sound keen on the case.

But there is a precedent here. Back in July 2001 Northcliffe's Aberdeen division was hit with a £1.3million fine for predatory pricing and attempting to take the rival Aberdeen Independent out of the market.

And there are examples elsewhere in the Gannett empire as well. Over in the states the parent company is no stranger to every trick in the book to force the competition out of town - as detailed in this book by Richard McCord.

The consequences of a monopoly are dreadful. Poor quality local news, no scrutiny of local authorities, inflated prices for advertisers and low wages for hacks. If - and it is a big if - Newsquest or any other publisher is caught taking part in predatory pricing activities the OFT must throw the book at them.