I started work in April 2000 and did really well until the situation with the Lewes & Uckfield Life ended my employment.
I joined Newsquest as an night pre-press manager, and very quickly got promoted to assistant pre-press manager. I was highly respected at Newsquest, bringing a wealth of experience and knowledge from my previous employment.
I was then promoted again to Contract Print Manager downstairs in production. I exceeded all my targets, and just 5 months after starting I was 131,000 pound above my target.
Newsquest prints newspapers from all over the country that are not Newsquest titles, the reason for this is that to maintain a press of that nature costs in excess of 4.5 million pounds per year, and that is without development. The press needs to run 24 hours a day, 6 days a week and there is not enough Newsquest titles to fill up all the print slots.
So that is where my job comes into play, I was responsible for looking after these clients and also filling any empty print slots with new titles.
(In January 2003 a print slot and price was agreed with Newsqust Sussex. On the week of publishing our first edition in March 2003, after compatible computers had been purchased, our print slot was pulled. Terry Brannigan)
Newsquest Sussex director said that we could not print the newspaper in Brighton, but could however print the Newspaper in Newsquest Colchester, this seemed very odd at the time, but accepted the situation.
Anyway, the day came when the paper was due to be printed, and Terry ran into some problems
(this was due to the fact our computers were set to work with the new presses at Sussex and not the older systems at Colchester. Terry Brannigan)
I was not around and Terry spoke to the prepress department upstairs unknown to me. A prepress member of staff spent many hours trying to sort out the problems, and when I came in the next day it all went wrong.
I am not sure who cancelled the print slot, but I presume it was Howard Scott, as I could have nothing more to do with it as I had a disciplinary hearing. In my opinion it was cancelled because Lewes and Uckfield Life was the competition as there was loads of politics internally as to whether we should or should not print the paper.
Terry would not have had enough time to print the paper elsewhere, as these things take a while to setup, also whether there was a print slot that would suit his distribution. I think that Newsquest were very aware of this fact. I was also made a scapegoat by Newsquest, but I am sure you will come to your own assessment.
Also cancellation of print slots never happened as long as I was there, the only thing that may have caused a problem would be a breakdown, but even then there was enough space on the press to catch up.
I was dismissed for undermining commercial and management credibility. I have also managed to find the appeal letter, and statement.
Appeal Hearing 20th May 2003
I would firstly like to reinforce that my original statement was the sequence of events which unfolded, and it is the truth with the supporting evidence.
Enclosed is a copy of that statement.Throughout the events of Lewes/Uckfield Life, I acted in a professional and business like manner.
I was aware of the files being sent to Newsquest Colchester, but fully informed Andy Willcocks my manager of the situation. My position in Newsquest Sussex Ltd does not give me authority to instruct other departments.
At no point in any conversation did I say it was ok to send the files, especially as the prepress department carried out the work, where I have no authority. I informed Chris Heath the Group Prepress Manager of the situation and history behind Lewes/Uckfield Life. I also expressed my concern to Howard Blanks the Prepress Manager in person and on the telephone, and said we should not be doing anything for Lewes/Uckfield Life. All three of the managers were aware the work was being carried out. I did not authorise the work to be carried out, and fully informed my manager and colleagues of the events as they unfolded.
With reference to Howard Scott’s letter on 9th April 2003, I understand the seriousness of undermining Howard Scott’s decision not to print Lewes/Uckfield Life, however, Newsquest Colchester printed the newspaper on Howard Scott’s direction.
My understanding is that Newsquest Colchester is part of the same group as Newsquest Sussex. I did not disregard management instruction, as I have already stated, I kept my manager Andy Willcocks fully informed, along with my colleagues who all knew about the sensitivity and instruction from Howard Scott with regard to Lewes/Uckfield Life.
I was not advised or instructed to make any changes to these instructions.
I have studied Howard Scott’s letter of dismissal and the notes taken during the disciplinary proceedings, and I would like to make some factual comments about some of the points made. Enclosed is a copy of the disciplinary letter. - ‘In particular, you maintained that your statement was totally accurate, given time to consult your diary and email.
Point 2 of your statement is factually incorrect, as my decision not to handle this work was taken at a meeting (which is minuted) on Wednesday 12th March 2003.’- Firstly, this point is not important in the context of the situation, it was not documented at the time, but spoken word, so I had to remember 3 weeks later. Secondly, the point is not tightly linked with why I was dismissed, and it is not significant that I said it was one day earlier.-‘The Group Prepress Manager stated that you spoke to him about this work (approx. midday Thursday) before the client appeared in the building. You disputed this.’This is an inaccurate account of events as I did not speak to Chris Heath until 4.15pm on Thursday 27th March as stated in point 6 of my statement enclosed, where I proceeded to fully inform Chris Heath of the situation I therefore requested my pass card information for Thursday 27th March.
During that day, I went to the accounts department at 10.18am to hand my commission sheet to Sean Pain and went straight back to my office, the enclosed proof confirms this fact. The next time I went upstairs was at 4.03pm to the prepress department, as written in my initial statement, point 6.
So I know the information given to Howard Scott was incorrect.‘You stated that you provided the Group Prepress Manager with “the history” behind this work. He says you told him only that it was being printed at Colchester because I wouldn’t permit it here.’ - I know that Howard Scott was given incorrect information, as Chris Heath appears not to be able to remember the time I came up to prepress, it is evident that he may not remember exactly how in-depth our discussion was about Lewes and Uckfield Life.
I also initially gave Terry Brannigan exceptional service, as with all my customers,
All the other points made in Howard Scott’s dismissal letter are factually incorrect, they are all based on spoken word with no written evidence or proof. I again reinforce that my statement was correct initially.
I know the facts given to Howard Scott where incorrect in order for Howard Blanks and Chris Heath to protect their own jobs. I know that someone kept some vital evidence from Howard Scott throughout the investigation as the enclosed letter proves, Howard Blanks saying ‘I was not the one who stitched Kevin Baker up.’
I make every effort to give excellent customer, continually progressing myself, and make money for Newsquest Brighton. I am sure this is evident in my successful employment as Contract Print Manager. (see enc. 8 of my statement). After just 5 months at the end of May 2003 I will be £131,000 above my target. I have an exemplary employment record, 100% commitment to Newsquest Sussex, and would not do anything to undermine commercial and management credibility in the company as stated in Howard Scott’s disciplinary letter on 9th April 2003.
I have also requested my personnel file from the HR department, which they received on the 9th April 2003, I have not received a reply to date.
Sunday, 2 September 2007
Brannigan Publishing witness statement
Dear Terry,
Nice to hear from you again, and I am glad you are persuing your claims against Newsquest for boycotting our up and coming new publication, so thought I would provide you with my experiences of the gradual change I had with clients as the time went on.
I have thought back to the time we were working together, and feel that the team of people we had working together and their dedication to producing an excellent, different but exciting new publication, should have been an outstanding success.
With my previous successful advertising sales experience, and an excellent new publication to sell, I felt confident when I approached potential new clients for our futures.
Part of my selling of the publication involved developing the 'property section' I approached Richard Taylor from the Halifax and sold him a series of 'Properties for Sale'. When the first couple of adverts had appeared, I called Richard and asked if the adverts were working with us, and he was so pleased with the respone, that on the 23rd of May 2003 the Halifax ran a testimonial ,in our paper to say they were getting the best response from advertising with us than any other media.
Four weeks later however, they cancelled all their advertising with us. I asked Richard why and he told me that Newsquest offered them free advertising if they pulled out of ours.
All the other Estate agents in the area when we first approached, were happy to try our publication at some time, but when approaching them again they were never contactable or said they were no longer interested!
The other things I had happen were, I had a long contract with Carol at Absolute Self Storage, but she told me that she had been approached by Newsquest with silly advertising prices, but because of our previous long advertising realtionship, decided she would stay with our publication until the contract ended. But did say, she would have to consider this at a later date because of the excellent prices Newsquest were offering.
Also, when we originally asked in newsagents in the small villages ie: Hailsham and where Village Carpets were if we could leave our publication for customers to pick up, they were delighted to take them and even asked to leave more. Later, however I found that I was asked not to leave them as they had been told not to accept them or they were put away or under other publications.
All the people who did appear were always very complimentary of the style and quality of the publication and felt like us we were going to be a geat success. You were a great person to work with Terry and I feel that with your experience and knowledge in the newspaper industry should have been a great business success, and feel very dissappointed that it ended as it did, but would work with you again, in a similiar venture.
Hope this helps, but please do not hesitate to contact me if you need any further information.
Speak soon
Kind regards
Carol FoxAdvertising Sales Executive
previously of (Brannigans)
Nice to hear from you again, and I am glad you are persuing your claims against Newsquest for boycotting our up and coming new publication, so thought I would provide you with my experiences of the gradual change I had with clients as the time went on.
I have thought back to the time we were working together, and feel that the team of people we had working together and their dedication to producing an excellent, different but exciting new publication, should have been an outstanding success.
With my previous successful advertising sales experience, and an excellent new publication to sell, I felt confident when I approached potential new clients for our futures.
Part of my selling of the publication involved developing the 'property section' I approached Richard Taylor from the Halifax and sold him a series of 'Properties for Sale'. When the first couple of adverts had appeared, I called Richard and asked if the adverts were working with us, and he was so pleased with the respone, that on the 23rd of May 2003 the Halifax ran a testimonial ,in our paper to say they were getting the best response from advertising with us than any other media.
Four weeks later however, they cancelled all their advertising with us. I asked Richard why and he told me that Newsquest offered them free advertising if they pulled out of ours.
All the other Estate agents in the area when we first approached, were happy to try our publication at some time, but when approaching them again they were never contactable or said they were no longer interested!
The other things I had happen were, I had a long contract with Carol at Absolute Self Storage, but she told me that she had been approached by Newsquest with silly advertising prices, but because of our previous long advertising realtionship, decided she would stay with our publication until the contract ended. But did say, she would have to consider this at a later date because of the excellent prices Newsquest were offering.
Also, when we originally asked in newsagents in the small villages ie: Hailsham and where Village Carpets were if we could leave our publication for customers to pick up, they were delighted to take them and even asked to leave more. Later, however I found that I was asked not to leave them as they had been told not to accept them or they were put away or under other publications.
All the people who did appear were always very complimentary of the style and quality of the publication and felt like us we were going to be a geat success. You were a great person to work with Terry and I feel that with your experience and knowledge in the newspaper industry should have been a great business success, and feel very dissappointed that it ended as it did, but would work with you again, in a similiar venture.
Hope this helps, but please do not hesitate to contact me if you need any further information.
Speak soon
Kind regards
Carol FoxAdvertising Sales Executive
previously of (Brannigans)
Brannigan v OFT - the complaint
Mr Vincent Smith
Director of Competition Enforcement Division
Office of Fair Trading
Fleetbank House
Salisbury Square
LONDON
EC4 8JX
RE: Mr T Brannigan v Office of Fair Trading
CAT ref: PA7/2006
Dear Mr Smith,
1) As per the private hearing in front of the Competition Appeal Tribunal on Friday 28 April 2006 and the President’s considerations, I have tried to set out my complaint against Newsquest in line with the OFT’s statutory guidelines recently issued in relation to complainants and third parties. This is in line with your request at the aforementioned hearing.
2) COMPLAINANT
Mr Terence Richard Brannigan
Formerly sole trader, trading as Brannigan Publishing
PERSONS AUTHORISED TO DISCUSS THE DETAIL OF THE COMPLAINT
Mr David Greene
Edwin Coe
2 Stone Buildings,
Lincolns Inn
London
WC2A 3TH
T: 020 7691 4000
F: 020 7691 4111
E: david.greene@edwincoe.com
Mr Ben Rayment
Monckton Chambers
1 & 2 Raymond BuildingsGrays InnLondonWC1R 5NR
T: 020 7405 7211
F: 020 7405 2084
E: brayment@monckton.com
3) COMPLAINEE
Newsquest (Sussex)
Brighton (The Argus and Leader Series)Argus HouseCrowhurst RoadHollingburyBrightonEast SussexBN1 8ARAd Doc: DX 136506 Brighton 10Tel: 01273 544544Fax: 01273 566114
4) MATERIAL EFFECT
I, the complainant, have been materially affected by anti-competitive behaviour by a competitor, the complainee. My business was also a customer of the complainee as regards news printing services. Due directly to the behaviour of Newsquest (Sussex), I, as sole trader, was made bankrupt in September 2003. I have lost my business, my livelihood in the newspaper industry, my personal relationship through stress, have suffered from depression and I am still trying to recover my credit rating despite having been discharged from my bankruptcy in April 2005. I had formerly owned my own home and put every penny I had into launching Brannigan Publishing in March 2003. An initial £25,000 personal injection from selling my home, along with loan and credit card assistance of approximately £60,000, was invested into the company after extensive business projections with my bank manager and accountant. My personal financial commitment has been lost through predation, while the majority of the repayment of other investment monies were included in my bankruptcy and have been logged against my name, preventing me from getting a cheque account or any form of credit since my discharge in April 2005, let alone making it possible for me to re-enter the newspaper publishing market. A real material growth of my company over the last three years would have been reasonably acknowledged if trading in an open market. With investor interest shown before being forced out of business after six months trading, the material effect is severe.
5) REASONS FOR THE COMPLAINT
The reason I have approached the OFT to investigate my complaint is due to the fact there is no other viable option open to me. At OFT’s suggestion I have pursued every course to fund private court action, have approached the LSC for help, tried to get insurance to cover costs and have tried to get assistance on a pro bono scenario. Unfortunately, as highlighted to the hearing, private litigation with regard to the Competition Act is not an option I perceive as being possible after all my efforts in that direction over the last 30 months. The comments at the hearing are highlighted on transcript pages 27/28 (Mr Rayment) and pages 32/33 (The President & Mr Greene). Also without the OFT’s powers of investigation, it is highly unlikely I would be able to produce evidence from Newsquest concerning the offer of free advertising, or whether their print slots in March 2003 were fully booked or not. I am however able to provide third party testimony from my former employee and the former print manager at Newsquest as to the predation/exclusionary conduct of Newsquest. After such a length of time now elapsed, especially as my office and everything within it was seized upon my enforced bankruptcy due to the behaviour of Newsquest (Sussex), I hope that some relatively simple inquiries would be sufficient to give the OFT a clear indication of whether a full-blown investigation should be pursued.
I would respectfully ask you to look into my complaint because:
-there is a good case that the Competition Act has been infringed;
-not only have customers and consumers been affected in the areas from which my titles were excluded, but the problems I have experienced as a new entrant into a local newspaper market appear to be endemic in the local newspaper industry up and down the country, based on the few new entrants to try to launch, the closing of printers, the acquisitions of the larger publishers and the clustering of titles;
-the conduct by a leading national player (or players) plainly flouts the OFT’s decision in Aberdeen Journals;
-unlike some complainants, due to the conduct complained of there is no realistic way that I can pursue this case myself (although I have done my best to explore this option).
6) The background information on my company and myself is in the newspaper industry. Up until November 2002, I was the team leader of an advertising sales department working for Johnston Press. I was with the company for almost six years, won sales person of the year and had built up a profitable area for the company. I had learnt extensive skills of design, journalism and production. I was hopeful for further promotion but decided to start my own company and two weekly free newspapers, Lewes Life and Uckfield Life. My bank manager and I calculated the sums necessary to start and fund a viable working company and I had full backing from my bank. We had also calculated that, within 18 months, expansion to other areas was highly likely as most of the set-up would already be in place. I had even lined up a big investor who wanted to put a minimum of £25,000 into the company when I launched in Eastbourne, targeted for mid 2004. The interested party was a barrister from Eastbourne, Mr Michael Gerritt LLB who was a close friend of my editor, Barry Lane. In time, a national plan was going to be formulated once we were established. It was reasonably expected that, by 2006, we would have launched five newspapers as a minimum. I sold my home and moved in to rented accommodation to release capital to launch the venture. A profit and loss projection was provided on an ongoing basis by my accountant, Humphrey & co, which showed our steadily growing income was on schedule to make a profit before illegal predation caused losses to build. With a modest increase of just £250 per week, we would have been making a profit by August 2003. With the assistance of my bank and the interest of investment, we had planned to turn a profit by March 2004, twelve months after launch, so a projection of August 2003 was excellent news.
7) I was responsible for seven full time staff and 36 part-time, all of whom lost their jobs. The majority of staff hired were unemployed at the time of launch, and wherever possible I used local businesses for services and supplies etc. This was part of my plan to ‘give something back’ to each local area around the country where we would be publishing, in people and resources. My whole ethos is that ‘Life is Local’ and planned to benefit each area financially and in community spirit. We hired a new office on the outskirts of Lewes on the main road to Uckfield and installed brand new computers, networking cables, telephone system, office supplies and desks and provided leased company cars to my sales staff. Everything apart from the computers supplied via an online distributor came from local businesses.
8) Before launch in March 2003, I had agreed a deal with Newsquest (Sussex) to print the papers. During January and February, Mr Kevin Baker, then print manager, informed us that we could chose any day to go to print as plenty of slots were available, so we agreed the price, print slot, delivery and technical specifications we would need. I informed him of all the details of the papers, including the areas we would be distributing in, namely the two nearby towns of Lewes and Uckfield in East Sussex. Everything was agreed and geared up for launch. In February, we agreed on a 2am slot on a Friday morning with distribution Friday morning by 9am. This gave us a longer editorial window to get stories out to the public as fresh as Thursday night. We opened the office on 3rd March for staff to sell advertising space and start work on all editorial aspects of a new newspaper and planned launch on 28th March.
9) At this point we faced our first major setback from Newsquest (Sussex). In March 2003, one week before our first issue, they decided to cancel our print slot, approximately six weeks after everything had been agreed and we had set up our whole computer system to work with theirs. They also informed us that they had no other print slot at any time of the week. Yet just a few weeks previously we were offered several slots depending on our requirements. With only one week until launch, this was a major problem and nearly stopped us before we had even begun.
10) After several phone calls to various companies, we managed to talk Newsquest (Essex) into printing us. As we were not in their area of sales, they appeared to be unaware of our problems with their Sussex counterparts at first, especially as we were now working hard to get the paper assigned a printer, printed and launched in that very week due to our previous problems with the late notice cancellation. This change involved many extra concerns and costs, such as transporting the papers from Colchester to the south coast, late deliveries from Newsquest (Essex), different technical specifications to the ones we’d set up for with Newsquest (Sussex) and an earlier print slot necessitating reviewing our whole procedures. As well as having to buy extra computers, changing from a pc based office to a mac orientated area due to the difference in printers, we also had less time to collate the late breaking stories of importance due to the earlier print slot, losing us ground on our competitors.
11) In early May 2003, Newsquest (Sussex) tried to bill us £176.25 for the help Mr Baker had provided us on launch. He had agreed that his time and assistance was free of charge to try and get our business. I spoke to Mr Baker mid May 2003 and he confirmed this, but they were trying to find a reason for taking us to court. This was later dropped and not followed up against us but no acknowledgement of this was forthcoming from Newsquest (Sussex).
12) While preparing to print our latest newspaper in late May 2003, word then reached us via the production department at Newsquest Colchester that, Mr Baker, print manager at Newsquest (Sussex), was sacked for accepting our business, although it was his job to fill the many spare slots with outside, independent work. We tried to phone him at his office but were also told by his former colleagues within the production department at Newsquest (Sussex) that he was dismissed for helping our paper launch. Unfortunately, after two and a half years, I am unable to remember the names within production as we dealt with several people each week, but Miss Angie Allen within their accounts department also confirmed this during a call from myself asking for written confirmation that the sum of £176.25 will not be pursued.
13) I had been advised by earlier solicitors not to do any private contacting of third parties such as Mr Baker just in case details were made public, but in order to offer as much assistance to the OFT as possible, I have tried to locate Mr Baker. After a recent call to Newsquest production department, I was provided with a mobile number for Mr Baker from 2003. Thankfully he still had the same number when I tried phoning it on 24th May 2006. Mr Baker openly stated that he was dismissed by Newsquest for helping my newspapers launch. As this was unfair dismissal, he started action against Newsquest and a settlement out of court was agreed. He was made to sign a confidentiality agreement and was worried about breaking this clause. Mr Greene has informed me that the OFT’s powers are not affected by such agreements, which I texted to Mr Baker two days later. He text replied that he would be happy to help and has emailed since that he is currently collating his paperwork to give us extensive details of his dismissal. Once I have received anything from Mr Baker, I will ensure the OFT receive it. I believe a call from the OFT to Mr Baker concerning his sacking and putting his mind at rest over the confidentiality agreement would be enough for a decision to be made as to whether there is probability of my claims being upheld and whether a full investigation should be carried out. One call which could prove vital. My concern though is that he may still be in contact with some people at Newsquest and my complaint may become public knowledge to them, so would ask the OFT to pursue this point as soon as possible before any collusion can take place.
14) Also during May 2003, the production department at Colchester told us that their counterparts at Sussex were furious with them printing our newspapers and asked them to cancel our print slots. The response was that Colchester could not do this as they had spare capacity and it was already a work in progress. I hoped this would be the end of Newsquest (Sussex) trying to prevent our newspaper being published, aware that the Competition Act was there to prevent any abusive actions from a dominant company in the market. Instead, our printing was no longer targeted and a different, hostile approach was taken against us.
15) The next major attack from Newsquest (Sussex) was against our newspaper titles – Lewes Life and Uckfield Life. They print a Gatwick Life in West Sussex and a Horley Life in Surrey. Despite the fact that I checked the name use with companies house etc, had never heard of the other two titles out of our area and that no other newspapers in East Sussex had the word ‘life’ in their title, they absurdly put their top solicitors onto us saying that they owned the right to the word ‘life’ and that we were trying to pass off our paper as a Newsquest title. Mr Gerritt informed them that the word life is generic and can be used by anyone. He also pointed out that on every front page of our newspaper we proudly declared that we were a local, independent newspaper. Despite the regular contact to and fro between them (and increasing costs for a new, small company such as ourselves), the case has never officially been dropped against me. Mr Gerritt tried several times to get this clarified when we hadn’t had any reply, asking them to confirm no further action was being taken, but no confirmation one way or the other was forthcoming.
16) Newsquest (Sussex) changed tactics and launched a market spoiler in Uckfield against our publication. This was within the town itself, with a few pick-up points elsewhere, such as in nearby Heathfield. The main aim was to foreclose the East Sussex market and prevent expansion of a new entrant. The biggest newspaper across the whole of Sussex is their Evening Argus title, which would have been severely hit hard after we had become established. Johnston’s three main titles under threat were the Sussex Life, Eastbourne Advertiser and Eastbourne Herald. At a later date, Johnston’s Hastings and Bexhill Observers may have been affected also. I believe in fair competition and that it is standard practice to launch a spoiler to try and drive out competitors. In some other markets, if this were done within the laws of this country, the bigger company could possibly manage to drive the smaller competitor out of business after a while just through service, financial clout and reputation with their customers. But our newspapers were building such a good reputation in such a short period of time with our readers and advertisers that Newsquest (Sussex) stepped up their campaign in an illegal manner.
17) Many of our advertisers were telling us that they were getting better response from our newspaper than any other they have ever used. This was ensuring good testimonial reports and increasing revenue, with the possibility of new clients more likely to follow. This was our continuing strategy to build the business until Newsquest (Sussex) began breaching the laws on price fixing and anti-competitive behaviour. They began to charge an excessively low – or FREE – price, which had no relation to the economic value of the product supplied, abusing their position of power. A prime example of this was with Halifax Estate Agency in Uckfield, who were weekly advertisers with us. They were delighted with their response from their advertising with us and had provided a testimonial to the fact, which we printed within our papers on 23rd May 2003.
18) Despite this, within four weeks, Halifax never advertised with us again and several other estate agents who had shown great interest had decided not to use us. We had been trying to build up our property section but had to give up when Halifax (£188 per week), NSA (£264.38 per week) and Lawson Commercial (£176.25 per week) decided not advertise with us anymore, despite telling us they were finding it successful. When we contacted the businesses, Richard Taylor of Halifax estate agency confirmed they had pre-agreed a run of free advertising with Newsquest (Sussex) as long as they pulled from ours. He told our Uckfield sales person Carol Fox that Newsquest (Sussex) were targeting the local property market to prevent us extending our revenue reach in East Sussex, based on the fact that estate agents tend to follow one another and tend to advertise en masse. This wasn’t a late space deal to run an advert Newsquest already had for the Halifax within their production department as often happens within advertising, it was to run newly designed, weekly full-page colour adverts at no cost. I believe this contravenes the Competition Act as it is price discrimination to foreclose the market against a new minor competitor. I have recently contacted Carol Fox to also provide a third party account backing these claims, and her email to me is attached.
19) I have contacted the Halifax branch in Uckfield. Mr Richard Taylor is no longer with the company, but Nicola Rummery, branch manager did try to help. Unfortunately her paperwork only goes back to 2004 so she provided me with a number for Halifax accounts department. Although they would not be able to tell me any confidential information, if an investigation were launched, they could be approached then.
20) I understand that variable pricing of advertising space, especially when selling late space is normal practice within the newspaper industry, but to target our customers in an effort to exclude us from the market and agree in advance such actions should not be allowed to be normal practice. I believe predation can be assumed due to the fact that the price is below average variable costs. Although Halifax estate agent is being held up as an example of predative behaviour, other companies who had said they were happy with our product and service, wishing to advertise more in the future, suddenly started to cancel without reason. Some companies such as Cradley Motors (£117.50pw), Elphicks (£235pm), Top Marks (£164.50pw) and Fabric Shop (approx £170 pw) gave us no reason. Carol at Absolute Self Storage (£705pw) said she was receiving pressure from Newsquest (Sussex) to leave our publication but her working relationship with our Carol was built up over a couple of years in the business. She carried on advertising but at a 50% level, changing from weekly to fortnightly. This is also referred to in the statement from Carol Fox. Various other companies we thought were going to join our advertising list after very positive meetings also suddenly decided not to advertise.
21) The way Newsquest (Sussex) launched into Uckfield, East Sussex, was by employing cross-subsidy with one of their free newspapers in another county, West Sussex. The majority of the advertising costs were covered from companies based in Haywards Heath and Burgess Hill in the next county, allowing for the introduction of free or excessively low cost advertising to companies in Uckfield. I believe that assessing any additional revenue from Uckfield including free of charge etc, independently from any already booking into the Haywards Heath Leader, minus additional staff salaries, printing and distribution costs for extending into the Uckfield area, shows the true facts of price predation. Newsquest and Johnston have a similar market share between them in West Sussex similar to East Sussex. Industry provided figures can be provided on further investigation.
22) Newsquest (Sussex) state that their Uckfield Leader was highly profitable from day one, mostly due to the profits raised from the Haywards Heath area, which would confirm the conclusion that this fact is based on cross-subsidy of a market spoiler. An inspection of accounts for both Leader titles throughout June, July and August 2003 should show how revenues were split, or how the existing publication suffered losses to cover their spoiler. Specific new advertising within the Uckfield Leader, minus businesses based out of area, will highlight the full extent of Newsquest’s intentions to foreclose Lewes and Uckfield Life publications. Within our publications, we were predominately targeting Uckfield and Lewes businesses. It would not make sense us printing an Uckfield newspaper, promote it as being a vital tool for the local community and then target local residents of Uckfield with advertisers nine miles away. An undertaking was in place where they financed losses from their Uckfield market from profits made in another market where it has market power. This resulted in significant effects on competition.
23) The basis of cross subsidy advertising from the Haywards Heath area into the Uckfield area also flies in the face of industry recognised facts concerning the distances readers travel to respond to advertising. Most people would travel a maximum of four miles for groceries and seven miles for electrical goods. With the majority of advertisers in the Uckfield Leader being from out of area in the next county, any benefit to Newsquest’s current advertisers in the Mid Sussex region is negligible, with Newsquest merely using their revenues to support a market spoiler against Uckfield Life.
24) An analysis of advertising revenue increased by extending a publication that was profitable in it’s own right will show that after additional costs Newsquest (Sussex) were operating in Uckfield by applying prices below variable costs. An assessment of such costs can easily be assessed with the help of Newsquest. Although our print costs were £1600 per week, these would be significantly lower for Newsquest as they would already be printing their Haywards Heath Leader. An additional print run needed to cover Uckfield and the surrounding area would mean printing approximately 10,000 extra copies after stopping the presses and changing plates etc. Assuming print costs are as much as 50% less than ours, that gives an approximate cost of £800. Our distribution costs of £900 would be similar for Newsquest based on the same number of houses geographically delivered to. Extra staff hired for selling advertising, printing and writing editorial could be estimated as a minimum of £2000 per week. Therefore a safe estimate of additional costs to produce Uckfield Leader on top of the Haywards Heath Leader can be assumed as nearly £4000 per week minimum.
25) Analysis of Newsquest accounts during Brannigan Publishing’s trading period of March-September 2003, and the advertising revenue gained from Uckfield businesses during the period of predation, will show major shortfalls below variable costs in the Uckfield marketplace, supported by businesses in another part of the county. I believe it would not have been feasible for Newsquest (Sussex) to launch in Uckfield with costs of £4000 until we became a new entrant in the market. Analysis of their internal memos will confirm when they first decided to launch in Uckfield. If we were a more established newspaper in the area, it would definitely not have made sense for them to launch in a market with low household and business capacity yet high market saturation of newspapers. Newsquest (Sussex) only launched to stop our new entrant in East Sussex from growing across the county and beyond. Newsquest (Sussex) and Johnson Press have been strongly rumoured within the industry to have a private cartel agreement concerning areas along the south coast, which is why no spoiler was launched in Lewes also. While working at Sussex Express for Johnston Press, I asked our managing director Mike Pakes why we have papers to the east, west and north of Brighton, but no paper in that small excluded area. He told me that Johnston Press and Newsquest (Sussex) have an agreement that no Johnston title would launch in Brighton against Newsquest, and they would reciprocate elsewhere. I do not have any documentation to this fact though. A point of collusion may not be relevant in my complaint, but Johnston Press would have also lost revenue in Uckfield. Again I can only hazard a guess, but perhaps Johnston targeted Lewes Life by increasing pagination, plagiarism and general abuse against my company, while Newsquest targeted Uckfield and took an illegal approach.
26) Added to this the fact that several companies in the area informed us of Newsquest and Johnston sales staff using defamatory remarks about our products in an anti-competitive abusive manner and their offer of free advertising to our regular advertisers as long as they removed their advertising from our newspaper, adds to the abusive nature of the major market dominant competitor. One such company between Lewes and Uckfield, RW Green tree surgeons, had said in 2003 that they would testify that both Newsquest and Johnston Press made such comments. I also contacted them recently and Alison Green remembers Geoff Hough of Johnston Press being abusive to the point they found it offensive and stopped using the local Johnston Press title, Sussex Express, after several years of business with them. I had built up a very good working relationship with the company before my replacement Geoff Hough took over the area.
27) Newsquest also informed various newsagents in the area that, if they stocked our newspapers, they would pull all of their products and subsidies currently being received. We were always building a list of pick-up points for customers living just beyond the delivery area to collect their paper every week, or for people who worked in Uckfield and Lewes but lived elsewhere. We did this because everyone enjoyed the community news and views portrayed in our publications. One such newsagent we were discussing stocking our newspaper was Weekes News Agency in Uckfield High Street. Although initially agreeing to stock our free copies, within a week they told our distribution manager Michael Cox that they had changed their mind after pressure from Newsquest (Sussex) and the threat of lost revenue for them. I have also contacted Mick Cox this week. He no longer has any of his extensive records but does remember that once the Uckfield Leader came on the scene, various newsagents stopped stocking our newspaper.
28) We went out and found many other collection points at golf courses, pubs etc, all of which were then targeted by Uckfield Leader to either stop receiving our publication and replace it with theirs, or to stock both. This is not usual trading behaviour for Newsquest’s free titles. They normally only deliver to households in the publication area through children delivering them after school. The Brighton & Hove Leader, probably Newsquest’s closest title to our Lewes offices, has a penetration rate of 35%-63% of households (as confirmed from industry figures). Our paper employed adults who delivered the paper every Friday morning without fail to the majority of houses in our areas (estimated at 95% minimum), closely monitored by my company’s distribution manager randomly phoning households in the area to confirm receipt and at what time, to guarantee regularity and reader familiarity. This ensured our product had built up a great awareness and acceptance. Many of our deliverers were greeted by householders, usually pensioners, on their regular rounds and were welcomed on the doorsteps for a quick chat and to be informed of any local events etc they’d like published. This gave us extra eyes and ears in the community that people trusted, to attract stories of interest and provide a top-notch service. The distributors had firm guidelines about pushing the paper completely through letter boxes, closing gates, not walking across grass and ensuring they always reflected my company in the best possible light. To this aim, we were quickly welcomed into the community and had a very good reputation, growing with every publication. Newsquest (Sussex) have proudly announced to the industry that their Uckfield Leader is the smallest of any of their operations. It can be safely acknowledged that, without the presence of the Uckfield Life newspaper, they would not have considered such a launch into a small conurbation against their usual practices. Internal documentation from Newsquest could confirm when they first decided to launch in the area, even if using cross-subsidy.
29) The whole ethos of my company was to be an integral part of local life and to add a sense of community. We employed local people; we ran community interest stories and campaigns and were making a real difference to people’s lives. This strategy could work on a nationwide basis with the cost effective nature of desktop publishing nowadays. Unfortunately the newspaper market seems to be a closed market nowadays with the majority of publications being owned by just a few large companies.
30) DESCRIPTION OF LOCAL NEWSPAPERS
Within the East Sussex area where we launched and were planning to extend, there is a mixture of paid-for and free titles. The majority of these are owned by two of the country’s biggest newspaper publishers – Newsquest, part of Gannett, the second biggest publisher of local newspapers in the country, and Johnston Press, the fourth biggest publisher of local newspapers in the country. Both forms of titles target exactly the same type of advertisers and readers, as shown in the Aberdeen Journals Decision. Both forms of newspapers can therefore be considered to be operating within the same markets of geography and readership.
31) Across the country, the regional press is the backbone of Britain's media, read by the vast majority of adults every week and considered to be the most trusted, responsible medium of all. There are 1,300 regional and local newspapers in the UK today, including 25 mornings (19 paid-for and 6 free), 75 evenings, 21 Sundays, 529 paid-for weeklies, and 650 free weekly newspapers. Consolidation is another problem for the local newspaper industry. The sector's participants have spent over £6.5b on acquisitions since October 1995 and such has been the growing industry concentration, the largest 20 local press publishers now account for 85% of all local press titles and 96% of total weekly circulation.
32) A Competition Commission report on a proposed newspaper merger in Northampton and Peterborough was concerned about the wide repercussions of ‘cluster publishing’ and the ‘live and let live’ attitude among major publishers. The report identifies a number of concerns. Opportunities for new launches become problematic where one newspaper group owns a majority of titles in an area. Also cluster publishing eliminates competitive pressure and can work to the disadvantage of advertisers who may see ad rates rise when groups have regional monopolies. As a result of the report Competition minister Melanie Johnson asked the Director General of Fair Trading to consider whether to initiate an industry-wide inquiry into consolidation of the regional press. I believe such an inquiry is long overdue, with examples of predation frequent.
33) The National Union of Journalists are also concerned about the consolidation and predative nature of the large publishers. An Early Day Motion was presented to Parliament. The EDM claims that journalists believe the industry has reached crisis point, with the biggest publishers effectively operating as regional monopolies and calls on the Government to investigate allegations of "profiteering and anti-competitive practices" by local newspaper companies. With job losses and budgets cuts due to consolidation, journalists within the industry working for the biggest publishers are highly concerned. The number of print presses and production departments closed is also significant in job losses. In my hometown of Eastbourne, Johnston Press bought TR Beckett, one of the town’s largest employers. The production department and print department were later closed.
34) Tremendous change has taken place in the regional newspaper industry, with more and more titles concentrated in the hands of fewer and fewer owners. The extent of this is illustrated by the following trends. In 1992 there were 200 companies, mostly family owned, publishing local and regional newspapers; by 1998 there were 137, and now there are fewer than 100 in total. Out of all of those, the top five publishers dominating the market own 72% of all newspapers published in the UK. In 1990 it was 43%. The top 20 own 85%, while the remaining 80 have been marginalized into just 15% of the title market. According to a House of Commons publication in 2000, the top five relates to profits of £3,292 million per annum. Unfortunately due to the time elapsed since my first contact with the OFT, the figures shown within this complaint are now two years old, but are still good indicators of the market today.
35) Although the word ‘local’ insinuates a smaller market of trading, with less impact on customers, the above figures highlight just how big a national market the publishers of local newspapers compete in, and why companies such as Newsquest fiercely fight for their dominance, even against smaller entrants into the market, due to growth potential of the new competitors and the possibility of lost income on a national scale.
36) DOMINANT MARKET POSITION OF NEWSQUEST
A Gannett company, Newsquest is the UK's second largest publisher of regional and local newspapers. It comprises more than 300 newspapers, including 17 dailies. They have a weekly readership of 13.6 million; a weekly circulation of 10.8 million copies; 9,100 employees; 11 newspaper printing sites.
37) Nationally, Newsquest have a market share of regional titles of 21.73%. This relates to a total weekly circulation of 10,552,859. Their operating profit for 2003 was £595 million.
38) Locally, the geographic market can be split into three geographical areas for consideration; by the county of East Sussex, Lewes and Uckfield.
39) Locally the impact can also be considered by product market and the general turnover and profitability of Newsquest (Sussex).
40) Their total market share can be looked at both geographically in just East Sussex, and just in the towns of Lewes and Uckfield where ‘Lewes & Uckfield Life’ had distributed.
41) NEWSQUEST IN EAST SUSSEX
Newsquest (Sussex) publish five newspaper titles in East Sussex: The Argus (daily paid-for title); Brighton & Hove Leader (weekly free title); South Coast Leader (weekly free title); Mid Sussex Leader (weekly free title); Uckfield Leader (weekly free title). The main Johnston Press titles in direct competition for advertisers to these titles are the Sussex Express, Eastbourne Herald, Eastbourne Advertiser, Hastings Observer, Bexhill Observer, Mid Sussex Times, Worthing Herald, the County Times and the Crawley Observer. Although Johnston have more titles, their circulation of these weekly paid-for titles are dwarfed by Newsquest’s Argus and free Leader titles in revenue generating. Previous OFT hearings have shown that paid-for and free titles work within the same market.
42) Across East Sussex, the Argus has an average readership of adults of 15.26% per week. The Brighton & Hove Leader has 14.87%; Mid Sussex Leader has 0.49%; South Coast Leader has 5.11%; Uckfield Leader has yet to produce readership figures.
43) Newsquest (Sussex) have the only print factory for newspapers in East Sussex.
44) Although figures for Newsquest (Sussex) are not available, through calculating the number of publications they produce on a weekly basis and a rough calculation of the advertising revenue each pools in, an annual figure of £7,280,000 is a safe assumption, averaging £28,000 per week. While I was at Sussex Express, we usually averaged approximately £18,000 per week from advertising.
45) With consideration to all titles in East Sussex from every publisher, Newsquest (Sussex) control a market share of 35.73% from their own titles without the inclusion of the Uckfield Leader which would push the figures over 40% county wide, but I do not currently have details for a market share of advertising revenue.
46) NEWSQUEST IN LEWES
Within Lewes, the Argus is distributed as the only daily paid-for title available from any publisher. It has a daily average readership of 25.01% of adults.
47) Within Lewes, there is only one other newspaper title from any other publisher each week. This is the Sussex Express by Johnston Press. Apart from the Argus and the Sussex Express, there is no other publisher within the market, with each sharing the ‘paid-for’ market and each agreeing not to publish a free paper.
48) NEWSQUEST IN UCKFIELD
Within Uckfield, the Argus is the only daily paid-for title from any publisher, with an average readership of 7.06%. They also publish the Uckfield Leader as a weekly free newspaper, which in theory is delivered to every household. Within Uckfield, the only other newspaper titles available apart from the Argus and the Uckfield Leader are Sussex Express (30.60% readership), Kent & Sussex Courier (14.03%) and the East Grinstead Courier (1.12%). This means that Newsquest publish 40% of the titles available in Uckfield.
49) With the widespread rumours of a cartel agreement between Newsquest and Johnston Press, their combined market dominance may become a factor in proceedings, so below are figures highlighting their combined dominance in Lewes, Uckfield and East Sussex markets.
50) NEWSQUEST AND JOHNSTON PRESS MARKET DOMINANCE
Within the UK, Johnston Press and Newsquest have a joint market share of 41.85%, relating to 544 titles out of 1300 nationwide (Newsquest 300 titles, Johnston Press 244 titles).
51) Within East Sussex, Johnston Press and Newsquest have a joint market share of 72.22%, relating to 13 titles out of 18 across East Sussex (Newsquest five titles, Johnston Press eight titles).
52) Within Lewes, Johnston Press and Newsquest have a joint market share of 100%, relating to one title each (Newsquest with their daily paid-for title ‘The Argus’, Johnston Press with their weekly paid-for title ‘Sussex Express).
53) Within Uckfield, Johnston Press and Newsquest have a joint market share of 60%, relating to three titles out of five (Newsquest with their daily paid-for title ‘The Argus, their weekly free title ‘Uckfield Leader’, Johnston Press with their weekly paid-for title ‘Sussex Express’). Others are East Grinstead Courier with a mere 74 total circulation and Kent & Sussex Courier with a 10.51% penetration rate of homes.
54) The only print factory for newspaper printing is held by Newsquest (Sussex) in Brighton. Johnston Press titles print out of Portsmouth in Hampshire.
55) With a joint weekly circulation of 18,915,190 across the UK, assessed profits of £1008 million per annum between them, both companies have a major reason, both locally and nationally, to prevent new entry into the media market.
56) From existing Newsquest (Sussex) Leader publications, their banner for free titles, it is clear that the usual procedure for launching a weekly free title is to target higher conurbation areas, such as with the Brighton & Hove Leader covering Brighton, Hove, Brighton rural, Shoreham and Portslade (137,906 households); Mid Sussex Leader covering Haywards Heath, Burgess Hill, Cuckfield, Hurstpierpoint, Lewes rural (45,820 households); South Coast Leader covering Newhaven, Peacehaven, Seaford (22,833 households). To launch the Uckfield Leader, targeting a small, rural town with a mere 10,386 households would appear to go against the company ethos and would indicate a change in usual practice, unless launched as a market spoiler.
57) All quantative data has been sourced from various sources including House of Commons, DTI, Newspaper Society, JICREG, Johnston Press, Newsquest, Gannett. I hope these details help to assess the market domination of the main two market dominators within the market Brannigan Publishing was trading, Johnston Press and Newsquest both nationally and locally.
58) AFFECT ON MARKET BY NEWSQUEST’S BEHAVIOUR
Although my complaint is concerned with a local market within East Sussex, the potential for further growth nationwide with the ease of desktop publishing nowadays means the main dominant companies have a great fear of any entrant, large or small. The affects on both local and national markets are huge and the OFT are desperately needed to show a strength within the market that contravening the Competition Act will not be allowed. There should be many more new entrants into the market, but studying the industry just shows that the larger companies are monopolising the market and buying up smaller businesses at an alarming rate. Cutbacks and job losses frequently follow to increase profits.
59) OUR TYPICAL CUSTOMERS, READERS AND ADVERTISERS
The typical customers of Lewes Life and Uckfield Life newspapers can be split into two main categories of readers and advertisers. Both groups are consistent entities across the markets of paid-for and free titles. In Lewes and Uckfield, a high percentage of households are AB and C1 categories on the social scale. Both are well above the national index, with AB category being 143% against the national target 100%. This means that our readers have disposable income to spend in the local market targeted by our advertisers. A majority of business owners in Lewes and Uckfield are also local residents, so can see first hand the service and household penetration of our titles. This encourages their spending on advertising with us, giving a good circle of interest and growth.
60) HOW CONSUMERS AFFECTED, LOCALLY AND NATIONALLY
There is little choice for consumers except from the main publishers such as Gannett. This gives consumers a poor choice, but more importantly means that the larger companies can price-fix their advertising rates, distribution and agree limits with the other major companies in the market. A new entrant, with less overheads, can give advertisers a reasonably priced campaign with more personal service for less than any cartel agreements in price, which are detrimental to businesses across the country.
61) ACTION SOUGHT
As per the proceedings at my private hearing in front of the Competition Appeal Tribunal on 28th April 2006 and the President’s hopes that the OFT would do whatever is possible to assist investigation of my complaint against Newsquest (Sussex) – transcript page 38. I request the OFT to revisit my complaint so that you may reach a view on whether or not, at the very least, there is at least a reasonable ground to suspect an infringement as a result of the documentation I have again provided you. This was suggested by yourself at the hearing, transcript page 28. I ask that this could be done with the adjournment for four weeks in mind. I believe if the OFT were to pursue the various “leads” I have provided the OFT would relatively quickly obtain a clearer view of how to proceed.
62) FACTUAL EVIDENCE SUPPORTING THE COMPLAINT
At the hearing I expressed my concerns that it was difficult to obtain evidence. Nevertheless I have made such inquiries as have been possible, including the statement of Carole Fox which supports my complaint regarding Newsquest’s exclusionary conduct. When I was made bankrupt, my office and everything within was seized, so I have very little documentation myself. It has also been quite a time passed for some witnesses to remember facts clearly, although Newsquest’s Mr Baker and my former employee Carol Fox can provide important evidence . I have always tried to act within the letter of the law as can be testified by the official receiver, so therefore was unable to take even personal possessions from the office. It is the unique investigative powers of the OFT to examine documents and computer records from Newsquest which can prove infringement of the Competition Act. If questions were asked of Newsquest concerning even just some of the points I have raised in my complaint, I would hope the OFT procedures would be able to cope with the 30 months that have elapsed and know how to obtain the relevant evidence. The Newsquest group would be seen to either help or hinder the investigation, which could have a marked effect on any financial penalties imposed.
63) I have tried to provide details of the markets and dominance within via various reports and surveys available in the market. I can provide evidence of the effect our newspapers were having within Lewes and Uckfield, including the testimonial from Halifax shortly before their last ever advert. I am, however, unable to obtain the most important documents and accounts which can only be provided by Newsquest via the OFT. It is my hope that once reasonable suspicion has been agreed through discussion with Mr Baker, these can be sought by the OFT. My former employee Carol Fox can also be asked to testify to the facts she has provided once the OFT decide it to be necessary.
64) OTHER INFORMATION
The most recent OFT Decision that should act as a principle for this complaint was in regards to the Aberdeen Journal.. Enforcement of breaches of the Competition Act in view of the AJ findings should be seen not to be tolerated by the OFT, to set an example and to guide the market to be open The Decision of the Director General of Fair Trading No. CA98/14/2002 - Predation by Aberdeen Journals Limited (Remitted case) 16 September 2002 (Case CE/1217-02) shows a prime example of their definitions of a newspaper publishing market and how possible behaviour patterns of a dominant market player could be shown as predative and have wide ranging effects, not only locally, but on a national scale.
65) OPTIONAL INFORMATION
In view of the serious effect predation has on the newspaper industry as a whole, you see very few new entrants into the market despite the low cost accessibility of desk-top publishing nowadays widely available. Many possible entrants are squeezed out of the market illegally and are expecting to be protected from such behaviour by the Competition Act. With this in mind the OFT should take into account the need to set an example to dominant publishing companies nationwide that enough is enough. Fair competitive trade should be the only reason a business doesn’t succeed, not predative or other exclusionary behaviour.
66) Brannigan Publishing had found a niche of providing a newspaper similar to a ‘quality paid for title’ delivered free to everyone in a local community. This idea would work on a greater scale to incorporate other towns similar to Lewes and Uckfield around the country, where Newsquest are one of the biggest shareholders of local newspapers, both paid-for and free. They are also buying out many smaller operations and have control of a majority of printing works necessary for newspapers to publish. The whole industry needs to be opened up and, as part of my claim, I wish to continue to publish newspapers both locally and nationally and without fear of anti-competitive behaviour. Without the OFT letting the whole industry know that it is being monitored, predative behaviour will continue. Whereas my complaint could prevent further approaches to the OFT if investigated and used as an example of following up activities as shown in Aberdeen.
67) Due to Newsquest’s predative behaviour, I was made bankrupt on 12th September 2003, six months after launch. It has left me both financially destitute and emotionally drained. I am unable to get back into the field of newspapers I thoroughly enjoyed locally due to the monopoly help by Johnston Press and Newsquest across the South. I am also unable to be a part of the communities I grew to love and be a firm part of due to my fall from grace. Added to the fact that I now owe £150,000 in my bankrupt estate, predominately to local businesses I had tried to support.. I have lost everything and cannot see any way back into my field of expertise without help via the OFT and the Competition Act.
68) LEGAL BASIS FOR THE COMPLAINT
Chapter I and II, Competition Act. For the reasons I have tried to explain above, I consider that Newsquest has pursued exclusionary conduct which was an abuse of its dominant position in the local newspaper market in Sussex. Furthermore, in my view there has been collusion between Newsquest and Johnstone Press contrary to the Chapter I prohibition.
Please investigate my complaint, as I have attempted to explain above it raises important issues which go far beyond simply my own position. In this case only the OFT will be able to get the bottom of what has gone on. I will attempt to give you as much assistance as I am able. I hope I have followed recent guidelines set by the OFT for my serious complaint to be considered. Thank you in advance for your help.
Yours sincerely,
T Brannigan
Director of Competition Enforcement Division
Office of Fair Trading
Fleetbank House
Salisbury Square
LONDON
EC4 8JX
RE: Mr T Brannigan v Office of Fair Trading
CAT ref: PA7/2006
Dear Mr Smith,
1) As per the private hearing in front of the Competition Appeal Tribunal on Friday 28 April 2006 and the President’s considerations, I have tried to set out my complaint against Newsquest in line with the OFT’s statutory guidelines recently issued in relation to complainants and third parties. This is in line with your request at the aforementioned hearing.
2) COMPLAINANT
Mr Terence Richard Brannigan
Formerly sole trader, trading as Brannigan Publishing
PERSONS AUTHORISED TO DISCUSS THE DETAIL OF THE COMPLAINT
Mr David Greene
Edwin Coe
2 Stone Buildings,
Lincolns Inn
London
WC2A 3TH
T: 020 7691 4000
F: 020 7691 4111
E: david.greene@edwincoe.com
Mr Ben Rayment
Monckton Chambers
1 & 2 Raymond BuildingsGrays InnLondonWC1R 5NR
T: 020 7405 7211
F: 020 7405 2084
E: brayment@monckton.com
3) COMPLAINEE
Newsquest (Sussex)
Brighton (The Argus and Leader Series)Argus HouseCrowhurst RoadHollingburyBrightonEast SussexBN1 8ARAd Doc: DX 136506 Brighton 10Tel: 01273 544544Fax: 01273 566114
4) MATERIAL EFFECT
I, the complainant, have been materially affected by anti-competitive behaviour by a competitor, the complainee. My business was also a customer of the complainee as regards news printing services. Due directly to the behaviour of Newsquest (Sussex), I, as sole trader, was made bankrupt in September 2003. I have lost my business, my livelihood in the newspaper industry, my personal relationship through stress, have suffered from depression and I am still trying to recover my credit rating despite having been discharged from my bankruptcy in April 2005. I had formerly owned my own home and put every penny I had into launching Brannigan Publishing in March 2003. An initial £25,000 personal injection from selling my home, along with loan and credit card assistance of approximately £60,000, was invested into the company after extensive business projections with my bank manager and accountant. My personal financial commitment has been lost through predation, while the majority of the repayment of other investment monies were included in my bankruptcy and have been logged against my name, preventing me from getting a cheque account or any form of credit since my discharge in April 2005, let alone making it possible for me to re-enter the newspaper publishing market. A real material growth of my company over the last three years would have been reasonably acknowledged if trading in an open market. With investor interest shown before being forced out of business after six months trading, the material effect is severe.
5) REASONS FOR THE COMPLAINT
The reason I have approached the OFT to investigate my complaint is due to the fact there is no other viable option open to me. At OFT’s suggestion I have pursued every course to fund private court action, have approached the LSC for help, tried to get insurance to cover costs and have tried to get assistance on a pro bono scenario. Unfortunately, as highlighted to the hearing, private litigation with regard to the Competition Act is not an option I perceive as being possible after all my efforts in that direction over the last 30 months. The comments at the hearing are highlighted on transcript pages 27/28 (Mr Rayment) and pages 32/33 (The President & Mr Greene). Also without the OFT’s powers of investigation, it is highly unlikely I would be able to produce evidence from Newsquest concerning the offer of free advertising, or whether their print slots in March 2003 were fully booked or not. I am however able to provide third party testimony from my former employee and the former print manager at Newsquest as to the predation/exclusionary conduct of Newsquest. After such a length of time now elapsed, especially as my office and everything within it was seized upon my enforced bankruptcy due to the behaviour of Newsquest (Sussex), I hope that some relatively simple inquiries would be sufficient to give the OFT a clear indication of whether a full-blown investigation should be pursued.
I would respectfully ask you to look into my complaint because:
-there is a good case that the Competition Act has been infringed;
-not only have customers and consumers been affected in the areas from which my titles were excluded, but the problems I have experienced as a new entrant into a local newspaper market appear to be endemic in the local newspaper industry up and down the country, based on the few new entrants to try to launch, the closing of printers, the acquisitions of the larger publishers and the clustering of titles;
-the conduct by a leading national player (or players) plainly flouts the OFT’s decision in Aberdeen Journals;
-unlike some complainants, due to the conduct complained of there is no realistic way that I can pursue this case myself (although I have done my best to explore this option).
6) The background information on my company and myself is in the newspaper industry. Up until November 2002, I was the team leader of an advertising sales department working for Johnston Press. I was with the company for almost six years, won sales person of the year and had built up a profitable area for the company. I had learnt extensive skills of design, journalism and production. I was hopeful for further promotion but decided to start my own company and two weekly free newspapers, Lewes Life and Uckfield Life. My bank manager and I calculated the sums necessary to start and fund a viable working company and I had full backing from my bank. We had also calculated that, within 18 months, expansion to other areas was highly likely as most of the set-up would already be in place. I had even lined up a big investor who wanted to put a minimum of £25,000 into the company when I launched in Eastbourne, targeted for mid 2004. The interested party was a barrister from Eastbourne, Mr Michael Gerritt LLB who was a close friend of my editor, Barry Lane. In time, a national plan was going to be formulated once we were established. It was reasonably expected that, by 2006, we would have launched five newspapers as a minimum. I sold my home and moved in to rented accommodation to release capital to launch the venture. A profit and loss projection was provided on an ongoing basis by my accountant, Humphrey & co, which showed our steadily growing income was on schedule to make a profit before illegal predation caused losses to build. With a modest increase of just £250 per week, we would have been making a profit by August 2003. With the assistance of my bank and the interest of investment, we had planned to turn a profit by March 2004, twelve months after launch, so a projection of August 2003 was excellent news.
7) I was responsible for seven full time staff and 36 part-time, all of whom lost their jobs. The majority of staff hired were unemployed at the time of launch, and wherever possible I used local businesses for services and supplies etc. This was part of my plan to ‘give something back’ to each local area around the country where we would be publishing, in people and resources. My whole ethos is that ‘Life is Local’ and planned to benefit each area financially and in community spirit. We hired a new office on the outskirts of Lewes on the main road to Uckfield and installed brand new computers, networking cables, telephone system, office supplies and desks and provided leased company cars to my sales staff. Everything apart from the computers supplied via an online distributor came from local businesses.
8) Before launch in March 2003, I had agreed a deal with Newsquest (Sussex) to print the papers. During January and February, Mr Kevin Baker, then print manager, informed us that we could chose any day to go to print as plenty of slots were available, so we agreed the price, print slot, delivery and technical specifications we would need. I informed him of all the details of the papers, including the areas we would be distributing in, namely the two nearby towns of Lewes and Uckfield in East Sussex. Everything was agreed and geared up for launch. In February, we agreed on a 2am slot on a Friday morning with distribution Friday morning by 9am. This gave us a longer editorial window to get stories out to the public as fresh as Thursday night. We opened the office on 3rd March for staff to sell advertising space and start work on all editorial aspects of a new newspaper and planned launch on 28th March.
9) At this point we faced our first major setback from Newsquest (Sussex). In March 2003, one week before our first issue, they decided to cancel our print slot, approximately six weeks after everything had been agreed and we had set up our whole computer system to work with theirs. They also informed us that they had no other print slot at any time of the week. Yet just a few weeks previously we were offered several slots depending on our requirements. With only one week until launch, this was a major problem and nearly stopped us before we had even begun.
10) After several phone calls to various companies, we managed to talk Newsquest (Essex) into printing us. As we were not in their area of sales, they appeared to be unaware of our problems with their Sussex counterparts at first, especially as we were now working hard to get the paper assigned a printer, printed and launched in that very week due to our previous problems with the late notice cancellation. This change involved many extra concerns and costs, such as transporting the papers from Colchester to the south coast, late deliveries from Newsquest (Essex), different technical specifications to the ones we’d set up for with Newsquest (Sussex) and an earlier print slot necessitating reviewing our whole procedures. As well as having to buy extra computers, changing from a pc based office to a mac orientated area due to the difference in printers, we also had less time to collate the late breaking stories of importance due to the earlier print slot, losing us ground on our competitors.
11) In early May 2003, Newsquest (Sussex) tried to bill us £176.25 for the help Mr Baker had provided us on launch. He had agreed that his time and assistance was free of charge to try and get our business. I spoke to Mr Baker mid May 2003 and he confirmed this, but they were trying to find a reason for taking us to court. This was later dropped and not followed up against us but no acknowledgement of this was forthcoming from Newsquest (Sussex).
12) While preparing to print our latest newspaper in late May 2003, word then reached us via the production department at Newsquest Colchester that, Mr Baker, print manager at Newsquest (Sussex), was sacked for accepting our business, although it was his job to fill the many spare slots with outside, independent work. We tried to phone him at his office but were also told by his former colleagues within the production department at Newsquest (Sussex) that he was dismissed for helping our paper launch. Unfortunately, after two and a half years, I am unable to remember the names within production as we dealt with several people each week, but Miss Angie Allen within their accounts department also confirmed this during a call from myself asking for written confirmation that the sum of £176.25 will not be pursued.
13) I had been advised by earlier solicitors not to do any private contacting of third parties such as Mr Baker just in case details were made public, but in order to offer as much assistance to the OFT as possible, I have tried to locate Mr Baker. After a recent call to Newsquest production department, I was provided with a mobile number for Mr Baker from 2003. Thankfully he still had the same number when I tried phoning it on 24th May 2006. Mr Baker openly stated that he was dismissed by Newsquest for helping my newspapers launch. As this was unfair dismissal, he started action against Newsquest and a settlement out of court was agreed. He was made to sign a confidentiality agreement and was worried about breaking this clause. Mr Greene has informed me that the OFT’s powers are not affected by such agreements, which I texted to Mr Baker two days later. He text replied that he would be happy to help and has emailed since that he is currently collating his paperwork to give us extensive details of his dismissal. Once I have received anything from Mr Baker, I will ensure the OFT receive it. I believe a call from the OFT to Mr Baker concerning his sacking and putting his mind at rest over the confidentiality agreement would be enough for a decision to be made as to whether there is probability of my claims being upheld and whether a full investigation should be carried out. One call which could prove vital. My concern though is that he may still be in contact with some people at Newsquest and my complaint may become public knowledge to them, so would ask the OFT to pursue this point as soon as possible before any collusion can take place.
14) Also during May 2003, the production department at Colchester told us that their counterparts at Sussex were furious with them printing our newspapers and asked them to cancel our print slots. The response was that Colchester could not do this as they had spare capacity and it was already a work in progress. I hoped this would be the end of Newsquest (Sussex) trying to prevent our newspaper being published, aware that the Competition Act was there to prevent any abusive actions from a dominant company in the market. Instead, our printing was no longer targeted and a different, hostile approach was taken against us.
15) The next major attack from Newsquest (Sussex) was against our newspaper titles – Lewes Life and Uckfield Life. They print a Gatwick Life in West Sussex and a Horley Life in Surrey. Despite the fact that I checked the name use with companies house etc, had never heard of the other two titles out of our area and that no other newspapers in East Sussex had the word ‘life’ in their title, they absurdly put their top solicitors onto us saying that they owned the right to the word ‘life’ and that we were trying to pass off our paper as a Newsquest title. Mr Gerritt informed them that the word life is generic and can be used by anyone. He also pointed out that on every front page of our newspaper we proudly declared that we were a local, independent newspaper. Despite the regular contact to and fro between them (and increasing costs for a new, small company such as ourselves), the case has never officially been dropped against me. Mr Gerritt tried several times to get this clarified when we hadn’t had any reply, asking them to confirm no further action was being taken, but no confirmation one way or the other was forthcoming.
16) Newsquest (Sussex) changed tactics and launched a market spoiler in Uckfield against our publication. This was within the town itself, with a few pick-up points elsewhere, such as in nearby Heathfield. The main aim was to foreclose the East Sussex market and prevent expansion of a new entrant. The biggest newspaper across the whole of Sussex is their Evening Argus title, which would have been severely hit hard after we had become established. Johnston’s three main titles under threat were the Sussex Life, Eastbourne Advertiser and Eastbourne Herald. At a later date, Johnston’s Hastings and Bexhill Observers may have been affected also. I believe in fair competition and that it is standard practice to launch a spoiler to try and drive out competitors. In some other markets, if this were done within the laws of this country, the bigger company could possibly manage to drive the smaller competitor out of business after a while just through service, financial clout and reputation with their customers. But our newspapers were building such a good reputation in such a short period of time with our readers and advertisers that Newsquest (Sussex) stepped up their campaign in an illegal manner.
17) Many of our advertisers were telling us that they were getting better response from our newspaper than any other they have ever used. This was ensuring good testimonial reports and increasing revenue, with the possibility of new clients more likely to follow. This was our continuing strategy to build the business until Newsquest (Sussex) began breaching the laws on price fixing and anti-competitive behaviour. They began to charge an excessively low – or FREE – price, which had no relation to the economic value of the product supplied, abusing their position of power. A prime example of this was with Halifax Estate Agency in Uckfield, who were weekly advertisers with us. They were delighted with their response from their advertising with us and had provided a testimonial to the fact, which we printed within our papers on 23rd May 2003.
18) Despite this, within four weeks, Halifax never advertised with us again and several other estate agents who had shown great interest had decided not to use us. We had been trying to build up our property section but had to give up when Halifax (£188 per week), NSA (£264.38 per week) and Lawson Commercial (£176.25 per week) decided not advertise with us anymore, despite telling us they were finding it successful. When we contacted the businesses, Richard Taylor of Halifax estate agency confirmed they had pre-agreed a run of free advertising with Newsquest (Sussex) as long as they pulled from ours. He told our Uckfield sales person Carol Fox that Newsquest (Sussex) were targeting the local property market to prevent us extending our revenue reach in East Sussex, based on the fact that estate agents tend to follow one another and tend to advertise en masse. This wasn’t a late space deal to run an advert Newsquest already had for the Halifax within their production department as often happens within advertising, it was to run newly designed, weekly full-page colour adverts at no cost. I believe this contravenes the Competition Act as it is price discrimination to foreclose the market against a new minor competitor. I have recently contacted Carol Fox to also provide a third party account backing these claims, and her email to me is attached.
19) I have contacted the Halifax branch in Uckfield. Mr Richard Taylor is no longer with the company, but Nicola Rummery, branch manager did try to help. Unfortunately her paperwork only goes back to 2004 so she provided me with a number for Halifax accounts department. Although they would not be able to tell me any confidential information, if an investigation were launched, they could be approached then.
20) I understand that variable pricing of advertising space, especially when selling late space is normal practice within the newspaper industry, but to target our customers in an effort to exclude us from the market and agree in advance such actions should not be allowed to be normal practice. I believe predation can be assumed due to the fact that the price is below average variable costs. Although Halifax estate agent is being held up as an example of predative behaviour, other companies who had said they were happy with our product and service, wishing to advertise more in the future, suddenly started to cancel without reason. Some companies such as Cradley Motors (£117.50pw), Elphicks (£235pm), Top Marks (£164.50pw) and Fabric Shop (approx £170 pw) gave us no reason. Carol at Absolute Self Storage (£705pw) said she was receiving pressure from Newsquest (Sussex) to leave our publication but her working relationship with our Carol was built up over a couple of years in the business. She carried on advertising but at a 50% level, changing from weekly to fortnightly. This is also referred to in the statement from Carol Fox. Various other companies we thought were going to join our advertising list after very positive meetings also suddenly decided not to advertise.
21) The way Newsquest (Sussex) launched into Uckfield, East Sussex, was by employing cross-subsidy with one of their free newspapers in another county, West Sussex. The majority of the advertising costs were covered from companies based in Haywards Heath and Burgess Hill in the next county, allowing for the introduction of free or excessively low cost advertising to companies in Uckfield. I believe that assessing any additional revenue from Uckfield including free of charge etc, independently from any already booking into the Haywards Heath Leader, minus additional staff salaries, printing and distribution costs for extending into the Uckfield area, shows the true facts of price predation. Newsquest and Johnston have a similar market share between them in West Sussex similar to East Sussex. Industry provided figures can be provided on further investigation.
22) Newsquest (Sussex) state that their Uckfield Leader was highly profitable from day one, mostly due to the profits raised from the Haywards Heath area, which would confirm the conclusion that this fact is based on cross-subsidy of a market spoiler. An inspection of accounts for both Leader titles throughout June, July and August 2003 should show how revenues were split, or how the existing publication suffered losses to cover their spoiler. Specific new advertising within the Uckfield Leader, minus businesses based out of area, will highlight the full extent of Newsquest’s intentions to foreclose Lewes and Uckfield Life publications. Within our publications, we were predominately targeting Uckfield and Lewes businesses. It would not make sense us printing an Uckfield newspaper, promote it as being a vital tool for the local community and then target local residents of Uckfield with advertisers nine miles away. An undertaking was in place where they financed losses from their Uckfield market from profits made in another market where it has market power. This resulted in significant effects on competition.
23) The basis of cross subsidy advertising from the Haywards Heath area into the Uckfield area also flies in the face of industry recognised facts concerning the distances readers travel to respond to advertising. Most people would travel a maximum of four miles for groceries and seven miles for electrical goods. With the majority of advertisers in the Uckfield Leader being from out of area in the next county, any benefit to Newsquest’s current advertisers in the Mid Sussex region is negligible, with Newsquest merely using their revenues to support a market spoiler against Uckfield Life.
24) An analysis of advertising revenue increased by extending a publication that was profitable in it’s own right will show that after additional costs Newsquest (Sussex) were operating in Uckfield by applying prices below variable costs. An assessment of such costs can easily be assessed with the help of Newsquest. Although our print costs were £1600 per week, these would be significantly lower for Newsquest as they would already be printing their Haywards Heath Leader. An additional print run needed to cover Uckfield and the surrounding area would mean printing approximately 10,000 extra copies after stopping the presses and changing plates etc. Assuming print costs are as much as 50% less than ours, that gives an approximate cost of £800. Our distribution costs of £900 would be similar for Newsquest based on the same number of houses geographically delivered to. Extra staff hired for selling advertising, printing and writing editorial could be estimated as a minimum of £2000 per week. Therefore a safe estimate of additional costs to produce Uckfield Leader on top of the Haywards Heath Leader can be assumed as nearly £4000 per week minimum.
25) Analysis of Newsquest accounts during Brannigan Publishing’s trading period of March-September 2003, and the advertising revenue gained from Uckfield businesses during the period of predation, will show major shortfalls below variable costs in the Uckfield marketplace, supported by businesses in another part of the county. I believe it would not have been feasible for Newsquest (Sussex) to launch in Uckfield with costs of £4000 until we became a new entrant in the market. Analysis of their internal memos will confirm when they first decided to launch in Uckfield. If we were a more established newspaper in the area, it would definitely not have made sense for them to launch in a market with low household and business capacity yet high market saturation of newspapers. Newsquest (Sussex) only launched to stop our new entrant in East Sussex from growing across the county and beyond. Newsquest (Sussex) and Johnson Press have been strongly rumoured within the industry to have a private cartel agreement concerning areas along the south coast, which is why no spoiler was launched in Lewes also. While working at Sussex Express for Johnston Press, I asked our managing director Mike Pakes why we have papers to the east, west and north of Brighton, but no paper in that small excluded area. He told me that Johnston Press and Newsquest (Sussex) have an agreement that no Johnston title would launch in Brighton against Newsquest, and they would reciprocate elsewhere. I do not have any documentation to this fact though. A point of collusion may not be relevant in my complaint, but Johnston Press would have also lost revenue in Uckfield. Again I can only hazard a guess, but perhaps Johnston targeted Lewes Life by increasing pagination, plagiarism and general abuse against my company, while Newsquest targeted Uckfield and took an illegal approach.
26) Added to this the fact that several companies in the area informed us of Newsquest and Johnston sales staff using defamatory remarks about our products in an anti-competitive abusive manner and their offer of free advertising to our regular advertisers as long as they removed their advertising from our newspaper, adds to the abusive nature of the major market dominant competitor. One such company between Lewes and Uckfield, RW Green tree surgeons, had said in 2003 that they would testify that both Newsquest and Johnston Press made such comments. I also contacted them recently and Alison Green remembers Geoff Hough of Johnston Press being abusive to the point they found it offensive and stopped using the local Johnston Press title, Sussex Express, after several years of business with them. I had built up a very good working relationship with the company before my replacement Geoff Hough took over the area.
27) Newsquest also informed various newsagents in the area that, if they stocked our newspapers, they would pull all of their products and subsidies currently being received. We were always building a list of pick-up points for customers living just beyond the delivery area to collect their paper every week, or for people who worked in Uckfield and Lewes but lived elsewhere. We did this because everyone enjoyed the community news and views portrayed in our publications. One such newsagent we were discussing stocking our newspaper was Weekes News Agency in Uckfield High Street. Although initially agreeing to stock our free copies, within a week they told our distribution manager Michael Cox that they had changed their mind after pressure from Newsquest (Sussex) and the threat of lost revenue for them. I have also contacted Mick Cox this week. He no longer has any of his extensive records but does remember that once the Uckfield Leader came on the scene, various newsagents stopped stocking our newspaper.
28) We went out and found many other collection points at golf courses, pubs etc, all of which were then targeted by Uckfield Leader to either stop receiving our publication and replace it with theirs, or to stock both. This is not usual trading behaviour for Newsquest’s free titles. They normally only deliver to households in the publication area through children delivering them after school. The Brighton & Hove Leader, probably Newsquest’s closest title to our Lewes offices, has a penetration rate of 35%-63% of households (as confirmed from industry figures). Our paper employed adults who delivered the paper every Friday morning without fail to the majority of houses in our areas (estimated at 95% minimum), closely monitored by my company’s distribution manager randomly phoning households in the area to confirm receipt and at what time, to guarantee regularity and reader familiarity. This ensured our product had built up a great awareness and acceptance. Many of our deliverers were greeted by householders, usually pensioners, on their regular rounds and were welcomed on the doorsteps for a quick chat and to be informed of any local events etc they’d like published. This gave us extra eyes and ears in the community that people trusted, to attract stories of interest and provide a top-notch service. The distributors had firm guidelines about pushing the paper completely through letter boxes, closing gates, not walking across grass and ensuring they always reflected my company in the best possible light. To this aim, we were quickly welcomed into the community and had a very good reputation, growing with every publication. Newsquest (Sussex) have proudly announced to the industry that their Uckfield Leader is the smallest of any of their operations. It can be safely acknowledged that, without the presence of the Uckfield Life newspaper, they would not have considered such a launch into a small conurbation against their usual practices. Internal documentation from Newsquest could confirm when they first decided to launch in the area, even if using cross-subsidy.
29) The whole ethos of my company was to be an integral part of local life and to add a sense of community. We employed local people; we ran community interest stories and campaigns and were making a real difference to people’s lives. This strategy could work on a nationwide basis with the cost effective nature of desktop publishing nowadays. Unfortunately the newspaper market seems to be a closed market nowadays with the majority of publications being owned by just a few large companies.
30) DESCRIPTION OF LOCAL NEWSPAPERS
Within the East Sussex area where we launched and were planning to extend, there is a mixture of paid-for and free titles. The majority of these are owned by two of the country’s biggest newspaper publishers – Newsquest, part of Gannett, the second biggest publisher of local newspapers in the country, and Johnston Press, the fourth biggest publisher of local newspapers in the country. Both forms of titles target exactly the same type of advertisers and readers, as shown in the Aberdeen Journals Decision. Both forms of newspapers can therefore be considered to be operating within the same markets of geography and readership.
31) Across the country, the regional press is the backbone of Britain's media, read by the vast majority of adults every week and considered to be the most trusted, responsible medium of all. There are 1,300 regional and local newspapers in the UK today, including 25 mornings (19 paid-for and 6 free), 75 evenings, 21 Sundays, 529 paid-for weeklies, and 650 free weekly newspapers. Consolidation is another problem for the local newspaper industry. The sector's participants have spent over £6.5b on acquisitions since October 1995 and such has been the growing industry concentration, the largest 20 local press publishers now account for 85% of all local press titles and 96% of total weekly circulation.
32) A Competition Commission report on a proposed newspaper merger in Northampton and Peterborough was concerned about the wide repercussions of ‘cluster publishing’ and the ‘live and let live’ attitude among major publishers. The report identifies a number of concerns. Opportunities for new launches become problematic where one newspaper group owns a majority of titles in an area. Also cluster publishing eliminates competitive pressure and can work to the disadvantage of advertisers who may see ad rates rise when groups have regional monopolies. As a result of the report Competition minister Melanie Johnson asked the Director General of Fair Trading to consider whether to initiate an industry-wide inquiry into consolidation of the regional press. I believe such an inquiry is long overdue, with examples of predation frequent.
33) The National Union of Journalists are also concerned about the consolidation and predative nature of the large publishers. An Early Day Motion was presented to Parliament. The EDM claims that journalists believe the industry has reached crisis point, with the biggest publishers effectively operating as regional monopolies and calls on the Government to investigate allegations of "profiteering and anti-competitive practices" by local newspaper companies. With job losses and budgets cuts due to consolidation, journalists within the industry working for the biggest publishers are highly concerned. The number of print presses and production departments closed is also significant in job losses. In my hometown of Eastbourne, Johnston Press bought TR Beckett, one of the town’s largest employers. The production department and print department were later closed.
34) Tremendous change has taken place in the regional newspaper industry, with more and more titles concentrated in the hands of fewer and fewer owners. The extent of this is illustrated by the following trends. In 1992 there were 200 companies, mostly family owned, publishing local and regional newspapers; by 1998 there were 137, and now there are fewer than 100 in total. Out of all of those, the top five publishers dominating the market own 72% of all newspapers published in the UK. In 1990 it was 43%. The top 20 own 85%, while the remaining 80 have been marginalized into just 15% of the title market. According to a House of Commons publication in 2000, the top five relates to profits of £3,292 million per annum. Unfortunately due to the time elapsed since my first contact with the OFT, the figures shown within this complaint are now two years old, but are still good indicators of the market today.
35) Although the word ‘local’ insinuates a smaller market of trading, with less impact on customers, the above figures highlight just how big a national market the publishers of local newspapers compete in, and why companies such as Newsquest fiercely fight for their dominance, even against smaller entrants into the market, due to growth potential of the new competitors and the possibility of lost income on a national scale.
36) DOMINANT MARKET POSITION OF NEWSQUEST
A Gannett company, Newsquest is the UK's second largest publisher of regional and local newspapers. It comprises more than 300 newspapers, including 17 dailies. They have a weekly readership of 13.6 million; a weekly circulation of 10.8 million copies; 9,100 employees; 11 newspaper printing sites.
37) Nationally, Newsquest have a market share of regional titles of 21.73%. This relates to a total weekly circulation of 10,552,859. Their operating profit for 2003 was £595 million.
38) Locally, the geographic market can be split into three geographical areas for consideration; by the county of East Sussex, Lewes and Uckfield.
39) Locally the impact can also be considered by product market and the general turnover and profitability of Newsquest (Sussex).
40) Their total market share can be looked at both geographically in just East Sussex, and just in the towns of Lewes and Uckfield where ‘Lewes & Uckfield Life’ had distributed.
41) NEWSQUEST IN EAST SUSSEX
Newsquest (Sussex) publish five newspaper titles in East Sussex: The Argus (daily paid-for title); Brighton & Hove Leader (weekly free title); South Coast Leader (weekly free title); Mid Sussex Leader (weekly free title); Uckfield Leader (weekly free title). The main Johnston Press titles in direct competition for advertisers to these titles are the Sussex Express, Eastbourne Herald, Eastbourne Advertiser, Hastings Observer, Bexhill Observer, Mid Sussex Times, Worthing Herald, the County Times and the Crawley Observer. Although Johnston have more titles, their circulation of these weekly paid-for titles are dwarfed by Newsquest’s Argus and free Leader titles in revenue generating. Previous OFT hearings have shown that paid-for and free titles work within the same market.
42) Across East Sussex, the Argus has an average readership of adults of 15.26% per week. The Brighton & Hove Leader has 14.87%; Mid Sussex Leader has 0.49%; South Coast Leader has 5.11%; Uckfield Leader has yet to produce readership figures.
43) Newsquest (Sussex) have the only print factory for newspapers in East Sussex.
44) Although figures for Newsquest (Sussex) are not available, through calculating the number of publications they produce on a weekly basis and a rough calculation of the advertising revenue each pools in, an annual figure of £7,280,000 is a safe assumption, averaging £28,000 per week. While I was at Sussex Express, we usually averaged approximately £18,000 per week from advertising.
45) With consideration to all titles in East Sussex from every publisher, Newsquest (Sussex) control a market share of 35.73% from their own titles without the inclusion of the Uckfield Leader which would push the figures over 40% county wide, but I do not currently have details for a market share of advertising revenue.
46) NEWSQUEST IN LEWES
Within Lewes, the Argus is distributed as the only daily paid-for title available from any publisher. It has a daily average readership of 25.01% of adults.
47) Within Lewes, there is only one other newspaper title from any other publisher each week. This is the Sussex Express by Johnston Press. Apart from the Argus and the Sussex Express, there is no other publisher within the market, with each sharing the ‘paid-for’ market and each agreeing not to publish a free paper.
48) NEWSQUEST IN UCKFIELD
Within Uckfield, the Argus is the only daily paid-for title from any publisher, with an average readership of 7.06%. They also publish the Uckfield Leader as a weekly free newspaper, which in theory is delivered to every household. Within Uckfield, the only other newspaper titles available apart from the Argus and the Uckfield Leader are Sussex Express (30.60% readership), Kent & Sussex Courier (14.03%) and the East Grinstead Courier (1.12%). This means that Newsquest publish 40% of the titles available in Uckfield.
49) With the widespread rumours of a cartel agreement between Newsquest and Johnston Press, their combined market dominance may become a factor in proceedings, so below are figures highlighting their combined dominance in Lewes, Uckfield and East Sussex markets.
50) NEWSQUEST AND JOHNSTON PRESS MARKET DOMINANCE
Within the UK, Johnston Press and Newsquest have a joint market share of 41.85%, relating to 544 titles out of 1300 nationwide (Newsquest 300 titles, Johnston Press 244 titles).
51) Within East Sussex, Johnston Press and Newsquest have a joint market share of 72.22%, relating to 13 titles out of 18 across East Sussex (Newsquest five titles, Johnston Press eight titles).
52) Within Lewes, Johnston Press and Newsquest have a joint market share of 100%, relating to one title each (Newsquest with their daily paid-for title ‘The Argus’, Johnston Press with their weekly paid-for title ‘Sussex Express).
53) Within Uckfield, Johnston Press and Newsquest have a joint market share of 60%, relating to three titles out of five (Newsquest with their daily paid-for title ‘The Argus, their weekly free title ‘Uckfield Leader’, Johnston Press with their weekly paid-for title ‘Sussex Express’). Others are East Grinstead Courier with a mere 74 total circulation and Kent & Sussex Courier with a 10.51% penetration rate of homes.
54) The only print factory for newspaper printing is held by Newsquest (Sussex) in Brighton. Johnston Press titles print out of Portsmouth in Hampshire.
55) With a joint weekly circulation of 18,915,190 across the UK, assessed profits of £1008 million per annum between them, both companies have a major reason, both locally and nationally, to prevent new entry into the media market.
56) From existing Newsquest (Sussex) Leader publications, their banner for free titles, it is clear that the usual procedure for launching a weekly free title is to target higher conurbation areas, such as with the Brighton & Hove Leader covering Brighton, Hove, Brighton rural, Shoreham and Portslade (137,906 households); Mid Sussex Leader covering Haywards Heath, Burgess Hill, Cuckfield, Hurstpierpoint, Lewes rural (45,820 households); South Coast Leader covering Newhaven, Peacehaven, Seaford (22,833 households). To launch the Uckfield Leader, targeting a small, rural town with a mere 10,386 households would appear to go against the company ethos and would indicate a change in usual practice, unless launched as a market spoiler.
57) All quantative data has been sourced from various sources including House of Commons, DTI, Newspaper Society, JICREG, Johnston Press, Newsquest, Gannett. I hope these details help to assess the market domination of the main two market dominators within the market Brannigan Publishing was trading, Johnston Press and Newsquest both nationally and locally.
58) AFFECT ON MARKET BY NEWSQUEST’S BEHAVIOUR
Although my complaint is concerned with a local market within East Sussex, the potential for further growth nationwide with the ease of desktop publishing nowadays means the main dominant companies have a great fear of any entrant, large or small. The affects on both local and national markets are huge and the OFT are desperately needed to show a strength within the market that contravening the Competition Act will not be allowed. There should be many more new entrants into the market, but studying the industry just shows that the larger companies are monopolising the market and buying up smaller businesses at an alarming rate. Cutbacks and job losses frequently follow to increase profits.
59) OUR TYPICAL CUSTOMERS, READERS AND ADVERTISERS
The typical customers of Lewes Life and Uckfield Life newspapers can be split into two main categories of readers and advertisers. Both groups are consistent entities across the markets of paid-for and free titles. In Lewes and Uckfield, a high percentage of households are AB and C1 categories on the social scale. Both are well above the national index, with AB category being 143% against the national target 100%. This means that our readers have disposable income to spend in the local market targeted by our advertisers. A majority of business owners in Lewes and Uckfield are also local residents, so can see first hand the service and household penetration of our titles. This encourages their spending on advertising with us, giving a good circle of interest and growth.
60) HOW CONSUMERS AFFECTED, LOCALLY AND NATIONALLY
There is little choice for consumers except from the main publishers such as Gannett. This gives consumers a poor choice, but more importantly means that the larger companies can price-fix their advertising rates, distribution and agree limits with the other major companies in the market. A new entrant, with less overheads, can give advertisers a reasonably priced campaign with more personal service for less than any cartel agreements in price, which are detrimental to businesses across the country.
61) ACTION SOUGHT
As per the proceedings at my private hearing in front of the Competition Appeal Tribunal on 28th April 2006 and the President’s hopes that the OFT would do whatever is possible to assist investigation of my complaint against Newsquest (Sussex) – transcript page 38. I request the OFT to revisit my complaint so that you may reach a view on whether or not, at the very least, there is at least a reasonable ground to suspect an infringement as a result of the documentation I have again provided you. This was suggested by yourself at the hearing, transcript page 28. I ask that this could be done with the adjournment for four weeks in mind. I believe if the OFT were to pursue the various “leads” I have provided the OFT would relatively quickly obtain a clearer view of how to proceed.
62) FACTUAL EVIDENCE SUPPORTING THE COMPLAINT
At the hearing I expressed my concerns that it was difficult to obtain evidence. Nevertheless I have made such inquiries as have been possible, including the statement of Carole Fox which supports my complaint regarding Newsquest’s exclusionary conduct. When I was made bankrupt, my office and everything within was seized, so I have very little documentation myself. It has also been quite a time passed for some witnesses to remember facts clearly, although Newsquest’s Mr Baker and my former employee Carol Fox can provide important evidence . I have always tried to act within the letter of the law as can be testified by the official receiver, so therefore was unable to take even personal possessions from the office. It is the unique investigative powers of the OFT to examine documents and computer records from Newsquest which can prove infringement of the Competition Act. If questions were asked of Newsquest concerning even just some of the points I have raised in my complaint, I would hope the OFT procedures would be able to cope with the 30 months that have elapsed and know how to obtain the relevant evidence. The Newsquest group would be seen to either help or hinder the investigation, which could have a marked effect on any financial penalties imposed.
63) I have tried to provide details of the markets and dominance within via various reports and surveys available in the market. I can provide evidence of the effect our newspapers were having within Lewes and Uckfield, including the testimonial from Halifax shortly before their last ever advert. I am, however, unable to obtain the most important documents and accounts which can only be provided by Newsquest via the OFT. It is my hope that once reasonable suspicion has been agreed through discussion with Mr Baker, these can be sought by the OFT. My former employee Carol Fox can also be asked to testify to the facts she has provided once the OFT decide it to be necessary.
64) OTHER INFORMATION
The most recent OFT Decision that should act as a principle for this complaint was in regards to the Aberdeen Journal.. Enforcement of breaches of the Competition Act in view of the AJ findings should be seen not to be tolerated by the OFT, to set an example and to guide the market to be open The Decision of the Director General of Fair Trading No. CA98/14/2002 - Predation by Aberdeen Journals Limited (Remitted case) 16 September 2002 (Case CE/1217-02) shows a prime example of their definitions of a newspaper publishing market and how possible behaviour patterns of a dominant market player could be shown as predative and have wide ranging effects, not only locally, but on a national scale.
65) OPTIONAL INFORMATION
In view of the serious effect predation has on the newspaper industry as a whole, you see very few new entrants into the market despite the low cost accessibility of desk-top publishing nowadays widely available. Many possible entrants are squeezed out of the market illegally and are expecting to be protected from such behaviour by the Competition Act. With this in mind the OFT should take into account the need to set an example to dominant publishing companies nationwide that enough is enough. Fair competitive trade should be the only reason a business doesn’t succeed, not predative or other exclusionary behaviour.
66) Brannigan Publishing had found a niche of providing a newspaper similar to a ‘quality paid for title’ delivered free to everyone in a local community. This idea would work on a greater scale to incorporate other towns similar to Lewes and Uckfield around the country, where Newsquest are one of the biggest shareholders of local newspapers, both paid-for and free. They are also buying out many smaller operations and have control of a majority of printing works necessary for newspapers to publish. The whole industry needs to be opened up and, as part of my claim, I wish to continue to publish newspapers both locally and nationally and without fear of anti-competitive behaviour. Without the OFT letting the whole industry know that it is being monitored, predative behaviour will continue. Whereas my complaint could prevent further approaches to the OFT if investigated and used as an example of following up activities as shown in Aberdeen.
67) Due to Newsquest’s predative behaviour, I was made bankrupt on 12th September 2003, six months after launch. It has left me both financially destitute and emotionally drained. I am unable to get back into the field of newspapers I thoroughly enjoyed locally due to the monopoly help by Johnston Press and Newsquest across the South. I am also unable to be a part of the communities I grew to love and be a firm part of due to my fall from grace. Added to the fact that I now owe £150,000 in my bankrupt estate, predominately to local businesses I had tried to support.. I have lost everything and cannot see any way back into my field of expertise without help via the OFT and the Competition Act.
68) LEGAL BASIS FOR THE COMPLAINT
Chapter I and II, Competition Act. For the reasons I have tried to explain above, I consider that Newsquest has pursued exclusionary conduct which was an abuse of its dominant position in the local newspaper market in Sussex. Furthermore, in my view there has been collusion between Newsquest and Johnstone Press contrary to the Chapter I prohibition.
Please investigate my complaint, as I have attempted to explain above it raises important issues which go far beyond simply my own position. In this case only the OFT will be able to get the bottom of what has gone on. I will attempt to give you as much assistance as I am able. I hope I have followed recent guidelines set by the OFT for my serious complaint to be considered. Thank you in advance for your help.
Yours sincerely,
T Brannigan
ACTION AGAINST NEWSQUEST
Newsquest, and it's parent company Gannett, have a growing reputation for their apparent attitudes to competitors.
It appears that for too long they have ridden roughshot over competitors and even their own staff and journalists.
Justice from the UK's governing bodies does not seem to be forthcoming in claims against Newsquest's apparent behaviour, as recently seen with my case before the Competition Appeals Tribunal against the Office of Fair Trading in my attempt to get them to investigate my claims of competition abuse.
With, in my opinion of course, fair play in the competitive market of newspapers not being upheld, I have decided to highlight some details which came out of my claims, in case anyone missed them.
All details are in the public domain and I must stress that this blog is just a personal representation of what I see as the situation and must be taken as such.
Anyone is welcome to post their personal views and comments on their apparent dealings with Newsquest and views on my case. Once again though I must stress that all are objective and personal opinions, not facts proven by law and I take no responsibility for comments posted by visitors to this blog.
It appears that for too long they have ridden roughshot over competitors and even their own staff and journalists.
Justice from the UK's governing bodies does not seem to be forthcoming in claims against Newsquest's apparent behaviour, as recently seen with my case before the Competition Appeals Tribunal against the Office of Fair Trading in my attempt to get them to investigate my claims of competition abuse.
With, in my opinion of course, fair play in the competitive market of newspapers not being upheld, I have decided to highlight some details which came out of my claims, in case anyone missed them.
All details are in the public domain and I must stress that this blog is just a personal representation of what I see as the situation and must be taken as such.
Anyone is welcome to post their personal views and comments on their apparent dealings with Newsquest and views on my case. Once again though I must stress that all are objective and personal opinions, not facts proven by law and I take no responsibility for comments posted by visitors to this blog.
Subscribe to:
Posts (Atom)
