CONCLUSION OF INVESTIGATION INTO EDITORIAL DISTRIBUTION
PRESS RELEASE
PRESS RELEASE
EDITORIAL DISTRIBUTION: ANTITRUST, A REGULATORY REVIEW TO IMPROVE CONSUMER ACCESS TO THE PRINTED INFORMATION MARKET AND ADDRESS THE CHALLENGES POSED BY THE INTERNET AND THE FREE PRESS
The conclusions of a fact-finding survey: as the Services Directive enters into force, the opening of newsstands should be liberalized to facilitate the entry of newcomers throughout the supply chain and to support points of sale wherever market support is lacking. The compensation criteria for distributors and retailers need to be revised to ensure supplies to individual newsstands and the economic equilibrium of independent distributors.
Editorial distribution needs to be modernized if the sector is to meet new challenges from the Internet and the free press and continue to ensure consumers full access to the information supply. These were the conclusions reached in a fact-finding survey by the Antitrust Authority, which uncovered a sector veiled in competition-related constraints and restrictions that limit its adaptability while providing insufficient safeguards for informational pluralism. A system-wide overhaul will be required to remove all of the unjustifiable restrictions and abnormalities that weigh down on the efficiency of distribution.
LIBERALIZING NEWSSTANDS
According to the Antitrust Authority, experiences elsewhere in Europe suggest that the full liberalization of points of sale is the key element. Competitive dynamics tend to be suffocated by existing regulations, which have typically been left to municipal policies and authorization procedures. Authorized retailers often fall victim to local distributors who refuse to supply them, resulting in the failure to open or in the forced closure of authorized points of sale. Full liberalization is also called for by the Services Directive, which soon comes into effect. For cases where free market dynamics fail to provide sufficient demand, the presence of newsstands could be supported through publicly-funded initiatives.
MODIFYING COMPENSATION IN THE SUPPLY CHAIN
According to the Antitrust Authority, the economic links in the editor-distributor-retail distribution supply chain need to be revised (see table).
In particular:
The specification of economic terms and conditions, from publishers all the way down to retailers, needs to be based on more flexible principles. In France, for example, the compensation received by retailers varies according to their degree of specialization and the quality of service provided.
Relationships between local distributors and newsstands also need to be reviewed. In Great Britain, the former may apply a carriage service charge that reflects the volume of newspapers purchased by the point of sale. To defuse the tension between authorized retailers and reluctant distributors, a minimum turnover requirement could be applied to retailers while distributors could assume a corresponding commitment to re-supply all retailers that satisfy these minimum requirements. Retailers with lower sales potential must, of course, be free to acquire newspapers through alternative channels, such as distributors from neighboring areas or through direct pick-up from distribution centers.
Publishers should use the quantity of products "sold" as opposed to the quantity "distributed" as the basis for compensating local distributors. This would force publishers to incorporate the actual costs passed on to distributors within their decision-making about print-runs and distribution. The urgent need for these modifications is signaled by the rapid contraction in the number of local distributors, which often fail to achieve an economic equilibrium. This results in distributors commonly enjoying exclusivity on overextended areas, which only exacerbates the imbalance of power between local distributors and retailers. Another important development concerns several large publishing groups which have begun to extend their reach downstream into national and local distribution, with lesser guarantees for the neutrality of distribution itself.
SAFEGUARDING THE PRINCIPLE OF EQUAL TREATMENT
Newsstands are being overcrowded with attachments, inserts and gadgets that limit the visibility of newspapers and magazines and reduce their sales potential. This situation could have important implications for the dynamics of competition and the pluralism of information itself: less shelf space is available, so that editorial news receives less market access to reach potential readers. Strictly editorial publications need to be safeguarded by applying equal treatment in a way that spares them from opportunistic practices. The obligation to provide distribution services for any periodicals that request them is often exploited by purported publishers in order to market products with highly questionable or non-existent editorial content. The German model, furthermore, demonstrates how distributors and retailers could be allowed to refuse supplies when the quantities being delivered are considered excessive, as gauged by actual sales during previous periods.
Rome, October 10th, 2009