The newstrade supply chain faces a major upheaval after several newspaper and magazine distributors announced they would not renew their current contracts with wholesaler Dawson News.

Dawson customers who sell magazines from Frontline, which manages BBC and Bauer titles, and Seymour, whose publishers include Imagine, Archant and Egmont, will be supplied by Smiths News from April 2010.

Associated Newspapers and Comag have said their titles will in future be delivered to retailers exclusively by Smiths and Menzies Distribution. The switch will take place in November 2010 for Associated and January 2011 for Comag.

Dawson’s finance director Hugh Cawley said: “We’ve got to accept that a large chunk of our news business is to disappear. We are looking at impact this will have on our profits.”

The wholesaler, which supplies 10,500 independent retailers from 15 main depots, currently has a 20% share of the newspaper and magazine distribution market. However, the impending changes will leave two just dominant wholesalers and call into question the level of competition in the supply chain.

Last year, after a long investigation, the Office of Fair Trading decided against referring the market to the Competition Commission.

Peter Harris, chief executive of parent company Dawson Holdings plc, said: “The partial contraction of the market from three players to two does not seem, to us, to be what the OFT was trying to achieve - to increase competition.”

As C-Store went to press, retailers supplied by Dawson’s said they had not been officially informed of the changes.