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Daily Mail & General Trust-owned Northcliffe Newspapers has been

fined £1.33m for anti-competitive practices involving cut-price

and free advertising.

Aberdeen Journals, owned by Northcliffe, was brought to book by the

Office of Fair Trading for a campaign of unfair pricing against the

Aberdeen Independent, and for abuse of its dominant market position.

The company publishes daily paid-for and weekly free newspapers in the

Aberdeen area and, according to the OFT, was incurring losses on its

weekly freesheet the Herald & Post in a bid to force its only rival out

of the market.

Northcliffe is understood to have greeted the OFT's decision with anger,

and is refusing to give up without a fight. "We will be appealing to the

Competition Commission against both the decision and the financial

penalty imposed," the publisher said in a statement.

The battle for the free newspaper market in Aberdeen began even before

the Aberdeen Independent was launched in 1996.

Following a failed court case to stop the launch, the Herald & Post

began to offer free and heavily discounted advertising to clients on the

condition they pull their ads out of the Independent.

Complaints by the Independent to the OFT in 1997 and 1999 resulted in

Aberdeen Journals signing an informal and then a formal agreement to

stop this practice.

This latest decision follows a complaint made under the 1998 Competition

Act that Aberdeen Journals was incurring losses in order to drive its

rival out of the market.

The OFT discovered that during 1997 and 1999, memos referring to the

Independent were sent between Alec Davidson, managing director of

Northcliffe, and Alan Scott, managing director of Aberdeen Journals.

"You agree to produce two scenarios as far as the Independent is

concerned," said one. "The first assumes we acquire them. The second

assumes you are given a sum of money to neutralise them."

Another, sent by Davidson to the commercial systems manager at Aberdeen

Journals, urged him to "please keep your foot on their neck".

John Vickers, director general of Fair Trading, said: "Aberdeen Journals

engaged in a persistent campaign of predatory conduct against the

Aberdeen Independent. Despite an OFT investigation, this conduct did not

stop when the Competition Act came into force last year."

Paul Robins, MD of the Aberdeen Independent, said the situation had been

particularly difficult for his ad sales staff, who had been forced to

argue their case against a rival offering free space.

"We should now have a level playing field - which is still tough against

an outfit like Northcliffe, but at least it allows us to compete," he

added.