Dawson News' painful demise ended in a swift coup de grace last month, with its business divided between the two remaining major players, Smiths News and Menzies Distribution, each expanding its regional empire. It's therefore no surprise to find the newsagents' trade bodies lobbying hard for a full market investigation by the Competition Commission (CC).
Among those crying foul is the National Federation of Retail Newsagents (NFRN)'s Dave Daniel, who argues that it is the duty of the Office of Fair Trading (OFT), which has the power to launch the CC inquiry, to ensure that the delivery structure is working in the best interests of consumers by achieving an appropriate balance between quality, price and availability.
"To achieve widespread availability, consumers need access to retailers who are local and willing to provide a wide range of titles that they want," he says. "Unfortunately, neither of these criteria are satisfied by supermarkets, who are not local and who only hard-range a limited stock of top-selling titles. This is why maintaining a strong and widespread network of independent newsagents across the UK is so important."
But, he says, in the topsy-turvy supply chain which sees publishers, through wholesalers, decide a store's allocation as opposed to the retailer who knows what he can sell independent newsagents cannot get the quantities and range they need to meet consumer demand. "Many retailers give up the struggle and stop selling newspapers and magazines," he says. "This cannot be good news for consumers and it is an issue that the competition authorities need to remedy."
Matters haven't been helped by Menzies' announcement that it will be putting up its Carriage Service Charges (CSCs) to retailers by 2% from this month that's shortly after it had shelled out £500,000 for its share of Dawson's territories and told investors that it expects its contract gains to add over £180m net sales revenue by end of 2010. Despite Menzies' explanation that the rise was due last January and deferred until now, to ask the retailer for an above-inflation contribution at time when fuel costs have fallen and with News International now doing its own distribution in some areas looks like the act of a wholesaler supremely confident it has its customers on the hook.
Dawson's demise came when its rivals made substantially lower bids for the publisher's distribution contracts earlier this year, and now, challenged to deliver at the price agreed, the fear is they will once again ask the retailer to contribute.
The Association of News Retailers' John Lennon points out that Menzies also dipped into its customers' pockets last year for a 9% increase in CSCs. "The constant increases are a stark symbol that the newspaper distribution process is not working," he says. "Now that Dawson News has exited the market, a bad situation has been made worse. We are calling on the OFT to look closely at the threat that the monopolistic position of the two remaining wholesalers has on carriage charge increases, and to give a clear view on how this will affect the interests of consumers.
"The best way to achieve this is through a competition investigation of the market," he believes.
NFRN's Daniel also feels the benefits are all flowing one way. "Smiths and Menzies have rationalised their branches, closed many local depots, opened big super-warehouses and centralised customer services into remote call centres," he adds. "This has achieved significant saving for the companies involved, but there is little evidence any of this benefit has been passed on to retailers.
"In fact, for the privilege of losing the support of knowledgeable and retailer-friendly local wholesale staff, retailers now have to pay an escalated carriage charge that is crippling them," he concludes.
It's also worth considering whether the two-headed monster can be controlled by the publishers that created it. Putting the distribution of their products into the hands of a duopoly looks like a short-sighted move, and unless they're planning to abandon the supply chain altogether moving to a subscription-only model, swapping 'dead tree' publishing for digital, or, like News International, taking on delivery themselves they could find themselves held hostage next time the distribution contracts come up for renewal.
The bridge between the printing press and the retailer's shelf has narrowed and is now guarded by two large trolls demanding tolls. A knight in shining armour, or at least the grey suit of the OFT, needs to take up his sword