This morning I made another submission to the ACCC on the issue of magazine supply, encouraging them to collect data to assess the fairness of the newsagent supply model versus the supply model used for our competitors. Here is the full text of the letter:
Magazine Publishers of Australia application A91472
While this letter is written on behalf of newsXpress newsagents, it is written with my experience serving in excess of 1,800 newsagents using the Tower Systems newsagency software and with the support of many other newsagents who have contacted me on this matter.
The model under which newsagents are supplied magazines compared to their competitors competitively disadvantages newsagents.
The disadvantage newsagents suffer will not alter from the implementation of a Distribution Code of Conduct as promoted by the Magazine Publishers of Australia (MPA) and proposed to be piloted as outlined in their Application A91472.
The application by the MPA to the ACCC opens for consideration the various models of supply of magazines in Australia.
For the ACCC to make an informed decision and to consider the public benefit of any change, we submit that the ACCC needs to undertake a thorough assessment of magazine supply.
The current magazine distribution model used by the distributors for newsagents is the same model that existed prior to deregulation in 1999. The model used for competitors of newsagents is one established post deregulation. The two models are quite different. Gordon and Gotch on their corporate website provides insights into how it works with two competitors of newsagents:
- GGA met with Newslink in April as part of the ranged review process to discuss ranging needs for the second half of 2015. Results from the range review will be communicated to publishers in the coming weeks, with the updated range to hit stores in July.
- WH Smith has new stores opening in Perth Airport, Melbourne Airport and Sydney International in the next six months. In addition to the Airport Sites there will also be a new hospital store opening in NSW. Layla Crawford commenced as the new category buyer for the re aligned Magazines and Books ‘Readables’ category on May 5th. The range review process has commenced for the July – Dec 2015 period with meetings scheduled for late May.
In their application, the MPA submits that it needs data to assess proposed changes. We say the MPA has access to all the data it needs to assess the situation in which small business newsagents find themselves.
We suspect that competitors of newsagents receive magazines through a set of rules, processes and commercial arrangements that competitively advantage them and that this could not be achieved if newsagents were treated the same. We suspect the treatment of newsagents enables publishers and distributors to treat newsagent competitors more favorably. We think there is data available to support this claim.
We urge the ACCC to request from the magazine distributors, Gordon and Gotch and Network Services, the following data points per magazine title distributed over the last year, tabulated in a spreadsheet to enable easy sorting and analysis.
- Title.
- Issue number.
- Newsagents:
- Number of newsagents supplied.
- Volume supplied to newsagents.
- Volume early returned from newsagents.
- Average on-sale (period on the shelves) for early returns.
- Volume returned by newsagents.
- Sell through %.
- Supermarkets.
- Number of supermarkets supplied.
- Volume supplied to supermarkets.
- Volume early returned from supermarkets.
- Volume returned from supermarkets.
- Sell through %.
- Petrol and convenience.
- Number of P&C supplied.
- Volume supplied to P&C.
- Volume early returned from P&C.
- Volume returned from P&C.
- Sell through %.
This data will enable comparison of sell-through efficiency by channel. It will also illustrate the range of titles supplied to each channel and the relative volume by channel, enabling an assessment of viability.
We urge the ACCC to request from the magazine distributors statements outlining how title ranges and issue supply allocations are set for each of their main retail channels: newsagents, supermarkets and petrol and convenience.
We urge the ACCC to request from magazine distributors and publishers details by title and by retail channel the wholesale price, stocking fee, marketing fee, returns processing fee and any other discount or financial support provided in any form.
We urge the ACCC to request from magazine distributors statements regarding returns processing requirements by retail channel: who counts returns and when and who pays for this; are returns physically returned?; when are returns credited?
We are confident that the information outlined above will demonstrate a less competitive model used for newsagents compared to other retailers.
Despite claims by magazine distributors and publishers, newsagents cannot control the range of titles they receive nor the volume of each issue they receive.
While the magazine distributors hold newsagents accountable for their level of indebtedness, they offer newsagents little ability to actually control their level of indebtedness.
Newsagents want to run commercial and competitive businesses. The current magazine supply model to them makes them uncompetitive in the magazine category. There is nothing in the proposal from the MPA that will improve the competitiveness of newsagents.
Email to ACCC of today:
Hannah,
I’m not sure if it’s OK to add any further comments, however I wish to fully support the further application by Mark Fletcher of today, I have copied into this email today.
I believe the ACCC should have another look at the Magazine model and Mark’s suggested proforma is excellent.
I would add that I an NOT a member of newsXpress or a user of Tower Systems, but a Newsagent of 28 years, who is seriously considering closing all our magazine accounts if changes cannot be made to the current system.
Thanks for your time
Regards
John
John thanks for doing this. The more newsagents bring this issue to the ACCC the better.
Whilst I doubt the ACCC will accept my additional request,(on the grounds that it is more to do with unfairness and competitive disadvantages than supply disadvantages) but it pisses me off just as much as the supply model disadvantage does.
On the main event, it’s time to stand up.
We all know what happens to the sheep of this world.
My email to Hannah –
Dear Hannah,
In relation to Magazine Publishers of Australia – Application A91472, specifically the letter written to Dr R Chadwick, General Manager Adjudication,
by Mark Fletcher, Director newsXpress Pty Ltd in which he asks:
“For the ACCC to make an informed decision and to consider the public benefit of any change, we submit that the ACCC needs to undertake a thorough assessment of magazine supply.”
I would like to add my support for all the requests contained within his letter. I too believe I am at a competitive disadvantage in comparison with the operational advantages I strongly suspect my competitors enjoy and I would like to be free of the pre-deregulation operational shackles that I don’t believe some of my competitors have to contend with.
Additionally I would like the ACCC to investigate why I am compelled to have Network Services (one of the drivers of the MPA request before the ACCC) hold a $7000 (approximately) security deposit of my money, for the pleasure of having an account with them.
I believe this selective impost is a financial disadvantage to me that Supermarkets, P&C outlets and indeed some other Newsagents do not have to contend with.
I have held an account with Network Services since 2003 and they have held my money since then. In that time I have never missed paying an account and have never had my supply suspended due to non-payment.
So I would say that after 12 years of being an faultless paying debtor to Network Services, I am not a risk and I should not have to continue to operate at a financial disadvantage to my competitors.
A considerable proportion of that financial disadvantage would be in the amount of earnings that sum could have been achieving for me over the past 12 years. I have not been informed of the amount of recompense I will be receiving from their use of my monies over the past 12 years, but what I can tell you is that I have been enjoying returns of in excess of 13% since November 2014 on some of my investments. This can be substantiated if needs be. I doubt I will be receiving a tenth of that return from Network Services. I can also add that there have been two occasions in that time when I sorely needed those funds to help in times of unforeseen emergencies.
I would like the ACCC to investigate why some Newsagents have to be saddled with this ongoing financial burden when others do not. I am aware that some Newsagents do not have to pay a security deposit for having an account with Network Services.
Yours Faithfully
Dennis Robertson
I have added to my submission too.
The independence of submissions is how
the commissioners at the ACCC are thinking.
They accept submissions from anyone in the industry but they have admitted in the past (i.e. with Aust post some years ago) that the commissioners look favourably on independent submissions from independent people so NEWSAGENTS
DO IT NOW for us to have some chance of success.
Dennis, you have come up with a good point about the security deposit which I will also include in a submission, along with a spread sheet of the last quarters returns(both supplementary and ontime, separately), sales and photographs of oversupply and piles of unsold magazines from Network after weeks on the shelf.
Our security is a bank guarantee to the sum of $13,400 favouring then ACP Magazines.
It cost $250 fee to set up with a fee of 1.5% p.a. paid half yearly or to a minimum of $160 p.a.
We are surely privileged as well to serve Network and Bauer. These are all forgotten costs in dealing with magazines.
Mark, another great submission covering new ground.
Great to see more newsagents responding. adjudication@accc.gov.au.
The ACCC remain quite comfortable in accepting submissions from Newsagents.
I say this to encourage any Newsagent who has concerns regarding the MPA application to let the authority know of those concerns.
It’s really easy to do and can be just a simple statement of your base concern, it doesn’t need to be a complex and time-consuming submission at all.
Whilst this issue may take the ACCC a while to work through, it would no doubt assist them to hear reasonably quickly from all those Newsagents who have concerns, including those who have been ham-strung with so-called security deposits while many, friend and foe alike, do not have to provide it??? Go figure.
Here is the response to my second submission to the ACCC to show they are happy to continue accepting suchlike from Newsagents.
Dear Hannah,
Yes, I can confirm that I would like the ACCC to place the submission on its public register on its website.
Yours Sincerely
Dennis Robertson
From: Ransom, Hannah [mailto:Hannah.Ransom@accc.gov.au]
Sent: Tuesday, 26 May 2015 11:56 AM
To: ‘Dennis Robertson’
Subject: RE: Magazine Publishers of Australia – Application A91472 [DLM=For-Official-Use-Only]
Dear Dennis
Thank you for your further submission. Could you please confirm via return email that you would like the ACCC to place the submission on its public register on its website?
Alternatively, if you consider that the submission (or part of the submission) is confidential, I have included a link to the ACCC’s guidelines for requesting the exclusion of information from the public register: http://www.accc.gov.au/system/files/Guidelines%20for%20excluding%20information%20from%20public%20register.pdf.
Yours sincerely
Hannah Ransom
Senior Project Officer | Adjudication Branch
Australian Competition & Consumer Commission
23 Marcus Clarke Street Canberra 2601 | http://www.accc.gov.au
T: +61 2 6243 1255
Hanna`s surname gave me a giggle…..
Just to clarify the timing issue, here is the response from ACCC received within a few minutes of asking the question.
“Hi Dennis,
We can receive submissions up until the ACCC issues its final determination (which is expected towards the end of June).
Having said that, the earlier we receive submissions the more weight the Commission is able to put on their content and the more widely interested parties can comment on the issues raised.
I hope this is helpful; please give me a call if you would like to discuss.
Kind regards,
Hannah
Hannah Ransom
Senior Project Officer | Adjudication
Australian Competition & Consumer Commission ”
and Allan, I would happily be held to ‘ransom’ by this helpful and charming person.
No worries Dennis…lol.
I found her name amusing given that is exactly how we have been held buy magazine distributors for years.
Spoke with Hannah today. Every response is considered. Th challenge is what they can and cannot consider under the Act in the context of this application.
I support the all points made here.
Publisher, what about a submission to the ACCC in support?
Oh the politics!
The MPA and ANF has created the politics, now we want action and some of us who are not stuck in the “old ways” will actually get off our bums and try to get change.