UK issues new draft on newsstand distribution

LONDON, May 31 (Reuters) UK regulators today said that distribution arrangements for newspapers and magazines, awarded on a local monopoly basis, ''may harm consumers and be difficult to justify in terms of competition law.'' The Office of Fair Trading scrapped an earlier proposal in March which would have curtailed the local monopolies of magazine distributors but kept the market for newspaper distribution intact.

The draft opinion issued today sets out a framework to determine whether magazines and newspapers distribution deals comply with competition law.

The regulator concluded the current system was not working well for customers and encouraged inefficiency, with more than 1.7 million copies of national newspapers unsold each day.

The OFT is also launching a fresh review of the newspaper code to establish whether the newspaper industry undertakings are still appropriate.

The UK wholesale magazine and newspaper market is dominated by three distributors -- WH Smith , Menzies Distribution and Dawson News -- which together control about 85 percent of the market.

The OFT's draft opinion will be followed by a consultation through September. 1, with a final opinion due early next year.

REUTERS SHB RK1818