OPINION: Will Press Distribution Charter be effective for retailers?

Adrian Smith, the former WHSmith News executive who has chaired the Press Distribution Forum in the UK, is a passionate promoter of the strengths of the newspaper and magazine supply chain in the UK.

In his introduction to last week’s launch of the Press Distribution Charter, Mr Smith says the intention is to “help retailers to serve their customers”. The charter has 80 clauses and a complaints mechanism, which builds on the previous ISSA regime.

However, while well intentioned the charter is always likely to fall short as far as retailers are concerned. The reasons for this are set out in an unrelated column by FT writer John Kay, who chose this week to discuss the weaknesses of regulation.

In 1887 the US decided to regulate its railroads at the request of farmers and merchants. However, Mr Kay quotes the president of the Union Pacific Railroad who supported regulation as saying: “What is desired is something having a good sound, but quite harmless, which will impress the popular mind with the idea that a great deal is being done, when, in reality, very little is intended to be done.”

In observing this, I am not saying that the charter and the forum are planning  to do very little or that they are as cynical as the Union Pacific president. However, Mr Kay argues that “regulatory capture” means that the people who regulate industries usually come to see those industries through the eyes of its leading players – in the UK newstrade, the publishers and wholesalers.

The reason for this, he argues, is that the regulator is dependent for information on the businesses it regulates and getting that information is more likely to come from the major companies operating in the industry. As the executives in these companies are likely to believe in their business plans and to believe that how they operate is in the public interest, their information is unlikely to suggest that major change is required. The regulator is therefore likely to follow the status quo.

In the case of the US railroads, it was the supreme court and not the regulator that changed the way railroads operated.

The charter sets out some useful standards that will help retailers to know what good service should look like. It does not, however, guarantee that retailers will get excellent service. The newstrade is likely to remain too complex for that.