In America, Microsoft is threatened with break-up by the courts for
contravening fair competition laws. On this side of the water, Stephen
Byers, the trade and industry secretary, announces measures to open up
the car market and improve price transparency. In the meantime, John
Lewis ponders whether it should sue Dixons for anti-competitive
practices in the personal computer market.
All good knockabout stuff. Our media have been in their element,
championing the consumer and roasting one industry after another on
their high moral altar, and not always fairly. Straight price
comparisons with continental Europe make for some easy targets. Perhaps
we should take a look closer to home - at our own advertising industry,
for example, and, while we’re at it, our campaigning media.
Let’s ask, for instance, why national newspapers impose a closed shop of
’accredited’ creative services suppliers. Setting standards is one
thing, but refusing to accept perfectly good copy from other (usually
cheaper) suppliers stifles competition.
The old trade union closed shops were universally condemned by newspaper
proprietors as restrictive practices, designed not to maintain craft
standards but to avoid competition and thereby keep labour costs
artificially high. Fortunately, the Office of Fair Trading is looking
into the practice.
And what of the long-running scandal of huge hidden ’discounts’ between
some advertising agencies and their creative services suppliers? The
frequently blatant price loading that results would lead to many a
collar being felt in countries with stricter commercial laws. In the US,
they’ve had the Sherman Act which outlaws anti-competitive practices,
Hope, however, springs eternal. On 1 March, the new Competition Act,
billed as the most fundamental reform of commercial law in 25 years,
came into force. Whereas, previously, there were only limited powers to
prevent companies rigging the market, the new system allows for fines of
up to 10 per cent of three years’ turnover on offenders.
The Act should be welcomed. Among other things, it will encourage the
long overdue development of independents in our market - companies that
can allow advertisers to see more clearly where their money goes. The
precedent is already there with the growth over the past few years of
Many creative services suppliers would welcome such a development - they
are fed up with carrying the can for high costs when the price they
often get paid bears very little resemblance to the price actually
charged to the advertiser.
If it also results in agencies fighting their own corner and being more
candid with clients, so much the better. One thing’s certain: the
transparency and fair competition that a healthy independent sector
would encourage in the creative services market will improve everyone’s
efficiency and lower costs.
As a final thought, let me quote Adam Smith: ’People of the same trade
seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some
contrivance to raise prices.’ It’s time we did something about it.
Have your say at www.campaignlive.com on channel 4.