Firm claims €1.5m hole over tender

PUBLICATIONS distributor Newspread has taken a legal challenge to a “flawed” and “unfair” tendering process under which its contract to distribute Ireland on Sunday newspaper and Buy & Sell magazine was terminated, resulting in lost profits of more than €1.5 million.

Wed, 19 Dec, 2007 - 00:00

Vivion Kilfeather

Newspread claims Associated Newspapers Ltd operated an unfair and arbitrary tendering process and has also made wrongful use of Newspread’s customer database following the termination of the commercial relationship between the companies.

Associated purportedly terminated, from August 2006, agreements under which Newspread had acted as distributor of the newspaper and Buy & Sell from 1992 and 2001.

Newspread claims the purported giving of one month’s notice of termination was a breach of contract and that it was entitled to 12 months’ notice.

Newspread has estimated its loss of profits on the Buy & Sell contract at €795,000 and, in the case of Ireland on Sunday, €765,000. It also seeks €20,000 for the costs of preparing a tender.

It claims Associated had decided in advance to award the tender to its rival Eason and that tender rules were biased in favour of Eason. Associated had allegedly failed to disclose that, at the time of the tender, it had a three-year contact in place with Eason for distribution of several key titles, thus making the result of the tender inevitable.

Newspread says it had learned that, as early as May 2006, while it still had the contracts to exclusively distribute the titles, Eason was issuing a recall note to newsagents that referred to Ireland on Sunday as a title distributed by it.

It also says that, in carrying out its obligations under the agreements with Associated, it had given Associated access to its extensive database relating to the newspaper ordering habits of newsagents.

Newspread claims it holds copyright of that database and that it was an express or implied term of the sides’ agreements that Associated would not make use of it once the commercial relationship between the sides ended.