COMPETITION watchdogs are expected to rule this week that Britain’s magazine distribution system is in breach of the law, a move that publishers fear will to lead 20,000 corner shops to abandon the sale of periodicals.

The magazine industry says that the principal beneficiary of the expected ruling by the Office of Fair Trading will be Tesco and other leading supermarkets, whose share of magazine sales has grown rapidly in recent years at the expense of newsagents.

But the supermarkets complain that that they get poor service from the current system of regional monopolies. Their executives argue that all retailers would benefit from having a choice of distributor.

Complaining about “the competition purists at the OFT”, Toby Hicks, a spokesman for the Periodical Publishers Association (PPA), the magazine producers’ trade body, said: “The supermarkets will want their own distribution system, meaning that it will no longer be economic to supply smaller newsagents.”

Under the present arrangements, which apply to both newspapers and magazines, the UK is divided into territories over which a distributor has a monopoly. In return, the distributor is obliged to supply small retailers, who can generate sales of at least £200 a week. The OFT wants to tear this system up, but only for magazines, whose distribution is not considered to be as time sensitive.

Professor Paul Dobson of Loughborough University, in research cited by the PPA, has concluded that if changes to the distribution system “were substantial”, they could lead to 20,000 out of 55,000 newsagents abandoning the sale of newspapers and magazines.

The gloomy prediction is fuelling worries at some publishers that the supermarkets will use their growing grip to demand editorial control over some titles. “We are not happy with the way this opens up the potential for a small number of retailers to exercise editorial control,” Mr Hicks said.

But while Tesco shifted “lads’ mags” such as IPC’s Loaded up a shelf earlier this month, the supermarkets say they have no interest in directly influencing editorial content. Nor, the publishers concede, is there any evidence of their having done so.

Richard Brasher, commercial director of Tesco, said: “People want to suggest that we are involved in censorship, which we are not. We want to show sensitivity to different groups of people, and move the (lads’) magazines out of harm’s way. Content is down to editors and publishers, who should ensure they act responsibly.”

A draft ruling from the OFT, expected about the middle of this week, will be put out for consultation, although a last-minute hitch could delay publication of the ruling until near the end of the month.

During the past four years the three largest supermarkets, Tesco, Asda and J Sainsbury, have seen their combined share of the magazine market increase by three percentage points to 22.3 per cent while the share held by independents fell from 37.6 to 33.6 per cent.

STACKING UP

Leading magazine retailers’ market share: 2004 (2000)

Independents 33.6% (37.6%)

WH Smith 15.8% (15.9%)

Tesco 12.1% (11.6%)

J Sainsbury 5.6% (4.5%)

Asda 4.6% (3.2%)

Source: Periodical Publishers Association

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