OFT rules out outdoor review, despite competition concerns

By Maisie McCabe, mediaweek.co.uk, Thursday, 30 June 2011 01:49PM

The outdoor media sector will not be referred to the Competition Commission despite advertiser trade body ISBA expressing its desire that the OFT do "more forensic work", according to a final decision from the Office of Fair Trading.

In its provisional decision in February the OFT said though there may be features of the market that may restrict, prevent or distort competition it would not be appropriate to refer the market to the Competition Commission.

The OFT consultation on its decision closed on 18 March and in a statement published today the OFT said: "Having carefully considered the consultation responses the OFT remains of the view that a reference to the Competition Commission would not be appropriate at this time."

The consultation received responses from five parties, including advertisers trade body ISBA, Aegis Media out of home agency Posterscope, the media owner CBS Outdoor and two "individual respondents with experience in the sector".

In its response ISBA expressed a desire that the OFT carry out "more forensic work" on the retention of rebates by specialist buyers and media agencies and said it would follow the OFT recommendation that ISBA take further steps to ensure transparency.

ISBA said it had concerns that the relatively high margins at outdoor specialists suggested that the specialist buyers retain rebates, rather than pass through to advertisers as suggested in the OFT’s provisional report.

Posterscope considered that a referral would not be justified on the basis of the study’s findings. Posterscope said, in its opinion, the reference test for referral had not been met given the OFT’s conclusions in relation to the competitiveness of various aspects of the market.

The outdoor media owner CBS Outdoor agreed with the proposed decision not to refer the market to the Competition Commission, in the light of "the guidance provided to advertisers and local authorities as well as industry initiatives to achieve greater transparency".

The first individual respondent sent a short email reiterating views that he had expressed during the course of the study. He asked the OFT to reconsider its position and focused on barriers to entry and revenue ceilings for smaller media owners.

The second individual, someone who had engaged with the OFT "extensively" during the course of the study, reiterated his views on practices in the industry and on alleged exclusionary conduct in the market.

This individual provided new information on a small unidentified media owner reaching an agreement with a large media owner to sell media space on its behalf after which the price achieved for space increase increased "substantially".

Other new information included pricing information for certain media assets before and after their acquisition by a large media owner, showing a significant increase, and information on a particular small media owner’s arrangements with a specialist buyer and the people on its board.

The investigation into Clear Channel Outdoor and JCDecaux's long-term exclusive contracts with local councils, which was launched following the provisional decision that they could restrict competition, is ongoing.

Today the OFT said: "The investigation is at an early stage and no assumption should be made that any of the contracts infringes competition law."

The OFT launched its investigation into outdoor advertising in May last year and had been expected to publish its findings by Christmas.

This article was first published on mediaweek.co.uk