Street furniture (outdoor advertising): contracts between media owners and local authorities

Office of Fair Trading (OFT) closed Competition Act 1998 case.

Issue

Suspected breaches of competition law in relation to agreements between Clear Channel UK (CCUK) or JCDecaux on the one hand and individual local authorities (LAs) on the other for advertising on street furniture.

Relevant provision

Chapter I prohibition, Competition Act 1998.

Outline of case

  1. In February 2011 the OFT opened a formal competition investigation into street furniture contracts agreed between CCUK or JCDecaux on the one hand and individual Local Authorities (LAs) on the other. This followed an OFT market study into the outdoor advertising sector, which identified potential competition concerns with street furniture contracts.
  2. The OFT had concerns that it was difficult for competitors of CCUK and JCDecaux to enter the market for roadside advertising, because street furniture contracts came onto the market for tender relatively infrequently, and exclusivity clauses in some contracts prevented LAs from signing agreements with rival providers.
  3. As part of its investigation, the OFT requested information from CCUK and JCDecaux and from a number of other participants in the market.
  4. In response to the OFT’s concerns, CCUK and JCDecaux offered voluntarily to make a number of assurances about their behaviour in respect of existing and future street furniture contracts. They have agreed to write to LAs with which they have existing contracts, setting out these assurances. Download a copy of the assurances (PDF, 71KB). In broad terms, CCUK and JCDecaux have agreed:
    • not to enforce exclusivity clauses which prevent competitors advertising on different types of street furniture from those covered by the contract, in locations more than 25 metres from existing street furniture advertising sites
    • not to enforce tacit renewal clauses which currently allow contracts to be rolled over automatically once they reach the end of their term
    • not to proactively seek extensions which have led to some existing contracts being lengthened rather than going out to tender at the end of the initial term
    • to cooperate with the LA to transfer to a new operator when a contract comes to an end
  5. The OFT has considered the future of the investigation in light of its prioritisation principles and concluded that it is appropriate to close the investigation on administrative priorities grounds.
  6. The decision to close this investigation on administrative priority grounds does not amount to a statement as to whether a party acted illegally and nor should any implication be taken that any party was acting illegally.
  7. The following considerations were collectively relevant in the OFT reaching this conclusion:
    • the impact of pursuing the investigation given the expected positive impact of the voluntary assurances on competition in the market
    • the deterrence impact and strategic significance of pursuing the investigation
    • the resource implications of pursuing the investigation
  8. Alongside this case closure summary, the OFT published a set of non-binding recommendations to LAs (PDF, 214KB) regarding their approach to tendering street furniture advertising contracts in the future and a list of current contract end dates (PDF, 98KB). These are separate from the assurances given by CCUK and JCDecaux, and are intended to further encourage competition in the market. 
  9. The decision to close this investigation should not be taken to imply that the OFT would not prioritise similar cases involving long-term contracts and/or exclusivity clauses in the future.

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