Journal pricing report may lead to cuts

A FALL in the price of British magazines is likely following an investigation carried out by the Director of Consumer Affairs, the Minister of State for Commerce, Mr Pat Rabbitte, has said.

Mr Rabbitte was speaking yesterday at the publication of a report into the pricing of British magazines in Ireland by the director Mr William Fagan.

The report found that between January 1994 and April 1996 the exchange rate dropped by 8.1 per cent but the drop in the retail cover price of British magazines was only 6.6 per cent.

In his report, Mr Fagan concluded "There is enough to be concerned about in this matter to justify an investigation by the Director of Competition Enforcement who is to be appointed under the Competition (Amendment) Bill 1994."

The Bill is about to go to Report Stage in the Dail. Under its measures a Director of Competition Enforcement could dictate the system used to decide the price of British magazines.

Mr Rabbitte said he had requested meetings with the two importers of magazines and with the Irish Retail Newsagents' Association. He will decide on a course of action after giving these groups a chance to respond to the report, he said. "But you know I think the report speaks for itself."

The two importers are Newspread and Easons. The managing director of Easons, Mr Michael Ryder, said the company would not be commenting until it had considered the report and sought a meeting with Mr Rabbitte. Mr Laurence Roe, deputy managing director of Newspread, also said it did not wish to comment yet.

The National Federation of Retail Newsagents, in a statement, said the consumer could be the biggest loser from the report. "Past experience has shown that any developments which impinge upon the profits of the wholesaler are frequently passed on to the retail sector."

The "most disturbing aspect by far of the present situation according to the report, was that the complex formula used to calculate the price of British magazines here was "operated in exactly the same way by the only two competitors on the Irish market and that both provide ready reckoners to retailers which give exactly the same Irish retail price for the same UK cover price."

The price of a British magazine in Ireland is calculated by converting the sterling price, and adding an "uplift" which had been agreed with the now defunct National Prices Commission to pay for distribution costs plus VAT at 21 per cent.

Mr Fagan said the National Prices Commission situation "should now be consigned to history". Mr Rabbitte said he took this to mean that "the concept of `uplift' should be consigned to the dustbin."

Mr Rabbitte said there was no indication there would be a reduction on VAT on magazines. It would, therefore, require a significant change in exchange rates for British magazines to be cheaper in Ireland than in Britain.

"It is essential to achieving wage moderation that industry and commerce in Ireland passes back the benefits of a strong currency to consumers and that the worldwide trend towards price reductions is fully reflected also in Ireland", Mr Rabbitte said.