Outdoor advertising to be subject of OFT investigation

THE level of competition in the outdoor advertising market is to be investigated by the Office of Fair Trading.

Says the body, which says its mission is “to make markets work well for consumers”: “The outdoor advertising sector has a complex, multi-leveled structure, with advertising agencies, specialist buyers of outdoor advertising space, outdoor media owners who provide the space, and site owners such as local authorities. The sector is highly concentrated at the levels of the specialist buyers and outdoor media owners. This study will consider whether there are any distortions of competition or barriers to entry at different levels within the sector.”

Among other things, the study will look at the payment of commissions by outdoor media owners to the specialist buyers and how these affect the incentives of those buyers.

The study will also enable the OFT to consider potential issues with contracts between local authorities and outdoor media owners. The OFT understands that some contracts might contain clauses that prevent local authorities from dealing with other outdoor media owners or with advertisers directly. This may be to the detriment of local authorities and therefore the tax payers that fund them.

Says the OFT’s Heather Clayton: “The cost of all forms of advertising is reflected in the price consumers pay for goods and services. This market study into outdoor advertising will take a look at whether the market works well in terms of offering firms and local authorities deals that are fair, competitive and transparent.”

The initial phase of the ‘market study’ is expected to last three months, during which time the OFT will gather and assess evidence from interested parties. The final duration and scope of the project will depend on the outcome of the initial phase. The market study is expected to be completed by December.

For more information, email outdooradvertising@oft.gsi.gov.uk