Stephen Foley: Dinosaur decision could spell the end of local papers

A dinosaur decision from the Office of Fair Trading, which has just scuppered the sale of Northcliffe Media's Kent news- papers to rival family-run publisher KM Group. The OFT referred the deal to the Competition Commission, prompting Northcliffe, owned by Daily Mail & General Trust, to withdraw its acquisition.

The costs of fighting a full competition investigation are disproportionate to the size of these businesses, KM said. That fact alone ought to tell you something about the declining power of many regional and local newspapers, and it is hard not to laugh at the OFT's reasoning.

"These companies publish the only local weekly newspapers in seven local areas in East Kent," it said. "The OFT's investigation concluded that the monopoly of local newspapers that would result in these areas risks costlier advertising for businesses and higher cover prices for readers."

The OFT has appeared not to notice that businesses can reach local consumers through a dizzying array of new media, either through paid advertising with Google and Facebook, or for free, with a bit of creativity on their part.

The OFT ruling significantly dents the chances of consolidation in the local and regional newspaper industry, at a time when it needs to get creative about cutting costs and sharing content. Without such consolidation, it is only a matter of time before the good people of East Kent – and everywhere else – are left without newspapers all together.

The notes struck by Sir Mervyn King sound gloomier each time the Bank of England Governor rises to speak. In Liverpool last night, he opined that, four years after the financial crisis, there are still politicians and governments refusing to face up to realities the crisis revealed.

Surely it is time to recognise that the underlying problem is solvency, not liquidity, he said. That was a jab at eurozone leaders who believe their problems are not too much debt, but the market's irritating refusal to fund their servicing of it.

At core, what is needed is a rebalancing of the world economy. Many countries in the West took on too much debt, from their consumers to their banks to their governments, and became to all intents and purposes insolvent.

Creditor nations including Germany and Japan must rebalance their economies, and invest at home rather than feeding the binge abroad. Yet China now, as Sir Mervyn pointed out, has far larger foreign exchange reserves now than at the start of the crisis.

It is inevitable that the international community will have to face these facts, yet its willingness to do so is only diminishing. No wonder Sir Mervyn is so gloomy.