A newspaper publisher has been ordered to pay £1m for abusing its dominant market position after failing to overturn an Office of Fair Trading decision at appeal.

Aberdeen Journals Ltd, which publishes the Evening Express and Press & Journal in north Scotland, was ruled to have used its own weekly Herald & Post to try to price a rival - the Aberdeen & District Independent - out of the market.

The Competition Appeal Tribunal upheld last September's OFT ruling that it broke competition law - but reduced the penalty from £1.328m.

Northcliffe Newspapers, which owns Aberdeen Journals Ltd, is to study the judgment and consider its options.

The tribunal judgment said: "Had Aberdeen Journals not priced at a predatory level in March 2000, the Independent would have incurred fewer losses, and would have gained significant business. On all those facts, it seems to us that the effect on trade … is plainly established.

"… pricing below average variable cost, even for a short period, can have a significant effect on competitors.

"In the present case, as we have already indicated, it is not a question of an isolated period of one month, but the continuation of a prolonged period of below-cost pricing lasting nearly four years.

"Even though pricing the Herald & Post below average variable cost was not illegal prior to 1 March 2000, the fact that such pricing took place means that the impact of predation in March 2000 [the period under discussion] was greater than it would otherwise have been."

Aberdeen Journals had appealed on the basis of insufficient and poorly gathered evidence, and that in the face of evidence which was gathered, its actions did not constitute predatory pricing.

The company asked for the original decision to be set aside, and failing that, for the penalty to be reduced or removed, and for a statement agreeing its conduct in the period 1 to 29 March 2000 did not infringe section 18 of the Competition Act 1998.

Aberdeen Journals took the opportunity to criticise the director of fair trading for trying to prove his case without economic evidence.

In particular, the company said that the director failed to carry out a survey of advertisers, as he could have done; that the "inconclusive" survey which was carried out, if anything, supported Aberdeen Journals; that the OFT statistical analysis was not properly carried out and, again, supports the case made by Aberdeen Journals; that the evidence was not a reliable indicator of market definition when prices are distorted; and that it showed that the products in question were in different markets.

But the tribunal's judgment said: "We conclude that the director has established that the Evening Express, Independent and Herald & Post all formed part of the market for advertising in local newspapers in the Aberdeen area in March 2000.

"We conclude that the director has established that Aberdeen Journals abused a dominant position in the supply of advertising in local newspapers in Aberdeen by pricing the Herald & Post below average variable costs during the month of March 2000."

On those grounds it ruled the penalty to be paid should be £1m and that the Aberdeen Journals' application to the tribunal should be dismissed.

A Northcliffe Newspapers spokesman said: "Northcliffe Newspapers notes today's judgment of the Competition Appeals Tribunal relating to its Aberdeen subsidary's pricing behaviour during a four-week period in March 2000.

"While disappointed that the CAT has found against it, Northcliffe is pleased to note a 25 per cent reduction in the fine.

"Northcliffe Newspapers will be studying the judgment in detail."