DAILY AND PERIODICAL PRESS DISTRIBUTION SYSTEM
PRESS RELEASE
PRESS RELEASE
THE COMPETITION AUTHORITY HAS COMPLETED ITS FACT-FINDING INVESTIGATION INTO THE DAILY AND PERIODICAL PRESS DISTRIBUTION SYSTEM: ITALY IS THE ONLY EUROPEAN COUNTRY TO SET QUOTAS FOR NEWSPAPER OUTLETS AND REQUIRE NEWSAGENTS TO OBTAIN A LICENCE. A SYSTEM TO PROTECT EXISTING NEWSAGENTS WHICH RESTRICTS COMPETITION, IMPEDING MARKET ACCESS BY NEW PRESS SELLERS, SUCH AS BOOKSHOPS, SMALL STORES OR SUPERMARKETS.
At its meeting on 22 July 2004, the Competition Authority resolved to close its fact-finding investigation that began pursuant to Section 12(2) of the Competition Act into the newspaper and periodical distribution system.
The investigation revealed that, in Italy, newspaper distribution is over-regulated, supposedly intended to protect the pluralism of information, but in reality it is only designed to guarantee the maximum protection possible for the newsagents currently on the market.
It is a level of protection without equal anywhere in Europe, considering that Italy is the only country in which newsagents are limited by quotas, and market access is subject to licensing.
The main distortion to competition on the newspaper retail market are the administrative market entry barriers. To open an exclusive or non-exclusive newspaper sales outlet prior authorisation is still required from the municipal authorities, which decide using their broad discretionary powers, which substantially closes market entry to any new newsagents, for the sole purpose of protecting those who are already trading.
These difficulties are compounded by the provisions implementing Legislative Decree 170 of 24 April 2001 which some regions have adopted on either a permanent or provisional basis, introducing unjustified constraints on marketing publications, which are likely to impose serious restrictions on healthy competition, and major constraints on trading. One such example is the general ban on non-exclusive sales outlets from selling newspapers and periodicals at the same time, or provisions which only entitle retailers to sell newspapers and periodicals on a non-exclusive basis if they were already doing so on that market during the trial period.
There is concern about the general constraints laid down in the Regional policies which are imposed upon municipal authorities when designing the siting of exclusive newspaper and periodical outlets, compliance with which is required before authorisation can be granted for newspaper and periodical sales under Article 6 of the Legislative Decree.
The newsagents' quota system, which is designed to protect those already working on the market, makes it impossible or very difficult for any new operators to enter the market, whether they are traditional newsagents or retailers already selling other products, primarily the supermarkets. The market entry of new newsagents would heighten competition between retailers, at least in terms of the quality of the service offered and in particular the siting of the newspaper sales outlets for the benefit of the consumer, because at the moment it is impossible to introduce price competition. This could also boost the readership, considering that in Italy the circulation level is very low. Only Portugal and Greece sell fewer newspapers than Italy.
The modernisation of the retail sales outlets is particularly important when one considers that the newspapers that are delivered by mail to subscribers, or delivered to private homes, only account for 8% of total sales compared with about 29% in France, 13% in the United Kingdom and 64% in Germany.
The traditional newsagents' network also seems rather unsuitable for selling less-known publications and those that have only recently come onto the market, which limits the full potential of competition on the newspaper and periodicals market, restricting the protection of the pluralism of information. It should be recalled in this connection that Parliament has already taken action by enacting Law 67 of 25 February 1987 ("Renewal of Law 416 of 5 August 1981, governing publishing companies and grants to publishers") which sets a threshold of 20% of the total circulation for each publisher, including both the nationwide and inter-regional sales of daily newspapers. However, this evidently distorts market competition because it prevents the more efficient companies from increasing sales beyond that quota, which, according to the antitrust analysis, is not tantamount to constituting a dominant market position.
According to the Authority's survey, other restrictions on competition are the fact that newspapers have a fixed selling price, and the fact that the financial terms and the way in which publications are sold to newsagents by publishers are identical for all retailers, whether they are exclusive or non-exclusive newsagents. It is therefore to be hoped that the statutory obligation to sell newspapers at the same price in every sales outlet will be abolished, and greater contractual flexibility introduced between the parties involved. Sales points that are not able to sell sufficient volumes could be willing to accept smaller discounts on the cover price, or at least to assume part of the risk for unsold copies.
Rome, 6 August 2004