The Newspaper Society (NS) has made a written submission to the government's review of BBC online, headed by ex-Trinity Mirror boss Philip Graf.
In his letter to Mr Graf, NS director David Newell says there is evidence that some local BBC websites are giving free publicity to advertisers that would normally use newspapers.
The BBC made a commitment not to publish local newspapers in the 1980s and the Newspaper Society assumed that this also meant licence fee money would not be used to publish local news and information online, Mr Newell says.
But there is growing evidence that the BBC is doing exactly that.
"Johnston Press raised as an example the comprehensive entertainment free listings section on www.bbc.co.uk/leeds to understand that the BBC is giving free publicity to exactly the same 'entertainment' customers that Johnston Press would typically try to sell advertising to," Mr Newell says.
"The BBC Leeds site is so strong on the Leeds student/nightlife scene that it will make life increasingly difficult for other media trying to generate revenues from this segment.
"Johnston Press would charge for online editorial content if there was a willingness to pay from the consumer. However, there is not a significant willingness to pay and part of the reason is because the consumer can obtain free local online news content from the BBC."
Mr Newell says NS members are united in the view that "the BBC should not replicate the print and online content of regional and local newspapers".
"This was an unjustified use of licence fee money," he says. "It distorted unfairly local media markets to the public detriment."
Newspaper Society submission to the Graf review:
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