Action before reference
The OFT carried out a seven-month study into the market and the effect of undertakings. These placed a cap on advertising prices in Yellow Pages and a restriction on the publication of local Yellow Pages directories in order to address concerns about high prices and the undermining of effective competition.
Reasons for reference
Date of reference: 5 April 2005
The OFT has referred the classified advertising services market to the Competition Commission (CC) for investigation. The OFT has continued concerns that competition in the market is not operating effectively.
The structure of the market remains highly concentrated with Yellow Pages and Thomson Local directories accounting for over 90 per cent of supply in the UK: barriers to entry are high due to strong branding and
network effects. Profits appear high and there seems limited competitive pressure on prices. While there has been some new entry to the market - notably, British Telecommunications re-entered the market in 2003 - the
OFT does not believe recent entrants have strengthened competition to a material degree.
Information about the Competition Commission’s market investigation can be found on GOV.UK.
Classified directory advertising services - terms of reference
The OFT, in exercise of its powers under section 131 of the Enterprise Act 2002, hereby makes a reference to the Competition Commission for an investigation into the supply of classified directory advertising services (the reference services) in the United Kingdom.
The OFT has reasonable grounds for suspecting that a feature or a combination of features of the market in which the reference services are supplied prevent, restrict or distort competition in connection with the supply of the reference services in the United Kingdom.
For the purposes of this reference:
‘Classified directory advertising services’ means the undertaking and performance of engagements to publish advertisements in printed directories which:
- show suppliers of goods and services classified by reference to the
goods or services supplied; and
- are distributed wholly or mainly to consumers.