Aberdeen Journals Ltd its been fined £1.328m for abusing a dominant market position.

The Office of Fair Trading penalty is confirmation of a decision it made in July 2001 after investigating allegations of predatory pricing by Aberdeen Journals, which publishes the Evening Express and Press & Journal.

That decision was overturned on appeal in March but investigations continued into whether the company was dominant in the advertising market, and whether it had abused that position.

The OFT has now ruled that the company did use its position to try to remove the Aberdeen & District Independent from the market by selling cheap advertising in its weekly Herald & Post. The penalty was incurred under the Competition Act 1998.

Director general of fair trading John Vickers said: “Aberdeen Journals deliberately incurred losses in a persistent campaign to remove its only direct rival from the market.

“This campaign continued despite the fact that the Competition Act 1998 prohibited predatory pricing from March 2000, and despite an OFT investigation already being in train.

“This is a serious infringement of the law, and the penalty should act as a deterrent to others.”

Its pricing practices were originally investigated following a complaint from the Independent – a free weekly newspaper – alleging that Aberdeen Journals was acting unlawfully by “the particularly low pricing of advertising space in its weekly free newspaper”, the Aberdeen Herald & Post.

A Northcliffe spokesman said: “Northcliffe Newspapers is disappointed with the decision from the OFT and has consistently contested both the decision and the financial penalty imposed.

“It would not be appropriate to comment further as Northcliffe Newspapers is currently considering its position.”

After the original penalty was set aside, Aberdeen Journals had until the end of June to make written representations to the Office of Fair Trading and then two more weeks to make oral statements.

The Northcliffe-owned Aberdeen Journals was adjudged to have infringed the Competition Act’s Chapter II prohibition, which makes the abuse of a dominant position unlawful.

The OFT’s further analysis confirmed its original finding that Aberdeen Journals was dominant in the market for the supply of advertising space in local newspapers, paid-for and free, in the Aberdeen area.

It also found that the company deliberately incurred losses when selling advertising in the Herald & Post – since relaunched as the Aberdeen Citizen – in an attempt to expel the Independent, its only direct rival, from that market.

The predatory pricing started in response to the launch of the Independent in 1996 and continued after the Competition Act came into force on 1 March 2000.

In calculating the level of the fine, the OFT took into account the fact that predation is a very serious infringement of the Competition Act 1998, and the need for the penalty to deter similar offences.

In mitigation, it took into account Aberdeen Journals’ full co-operation throughout the initial investigation and the fact that it took rapid steps to cease its infringement.

Aberdeen Journals had a turnover of £33.9m in the financial year ending October 3, 1999.