Peace pact proposed over magazine distribution war

Britain's supermarket groups are being offered two alternative peace plans to resolve the bitter dispute over the distribution of magazines.

Britain's supermarket groups are being offered two alternative peace plans to resolve the bitter dispute over the distribution of magazines.

The row was sparked off after WH Smith signed an exclusive agreement to supply magazines to Tesco's 658 United Kingdom stores, which smashes the existing arrangements between publishers, wholesalers and retailers.

The first offer, code-named Project Falcon, is proposed by wholesalers Surridge Dawson and John Menzies.

The alternative idea, code-named Project Solomon, is being drafted by distribution companies Comag, Frontline and Marketforce.

The peace plans are being formulated as the row hits boiling point, which has led to legal threats; magazines being taken off Tesco's shelves; complaints to the Office of Fair Trading, and briefings with government ministers.

It is understood that Tesco, Safeway, J Sainsbury, Asda and WH Smith will discuss the two plans at an emergency meeting on Wednesday, to be hosted by the trade organisation, the British Retail Consortium (BRC).

Project Falcon aims to offer major retailers an alternative to the existing supply chain, which Tesco has branded "archaic" and "inefficient". John Menzies and Surridge Dawson have already made presentations to Britain's four major supermarket groups. However, it is understood that WH Smith has dismissed the idea.

Project Solomon, which has the backing of the Periodical Publishers' Association, aims to offer a common system where magazines can be delivered to both supermarkets and Britain's 55,000 independent newsagents.

The backers of Project Solomon are due to meet executives at Tesco on Wednesday to discuss the idea.

Of the two plans, project Solomon is the least developed, as its backers privately want to incorporate the ideas from Tesco and other parties following consultation.

However, the plan is understood to include measures to make the supply of magazines more efficient, with the introduction of new IT and common billing systems.

The negotiations this week are, however, unlikely to put an end to the row.

One potential iceberg on the horizon is the BRC meeting. It is designed to gain a common industry consensus on the issue of distribution. However, already there are signs of dissent.

The National Federation of Retail Newsagents, a BRC member which represents 22,000 small newsagents, is concerned that its position will be at odds with that of other members.

Margaret Adams, the group's national president, said: "I don't see why our members should pay for the extra costs of the system proposed by WH Smith and Tesco. It is not something we will roll over on."

Ms Adams added: "We are BRC members. If the organisation supported the new system [proposed by WH Smith and Tesco] then we would have to question whether the BRC continues to work for us."