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Britain€™s Office of Fair Trading issued a statement on April 5 that it would request that the nation€™s Competition Commission begin an investigation into the UK classified directories market. The OFT made the recommendation based on its conclusion that the competition that has emerged recently in the UK directories market has not produced results that satisfy the agency.

The agency appears to want highly distributed market share, less profitable market leaders and less expensive advertising choices for small businesses. The OFT has since 2001 placed Yell, the market leader, under a strict rate cap, equal to the rate of inflation (retail price index) less 6 percent. From 1996 to 2001 the rate cap was RPI minus 2 percent. The OFT€™s announcement does not guarantee a renewal of the rate cap, nor does it suggest that a rollback is very likely.

The Kelsey Report will cover this issue in greater detail this week in the Local Media Journal as well as in an upcoming Advisory.

This Post Has 2 Comments

  1. The announcement by the OFT effectively wiped out 300 million pounds in value in a day, as Yell's stock closed down almost 10 percent today. It seems to us that UK directories has the makings of a very healthy competitive environment, and is a more competitive market than most in Europe. It also seems the OFT is frustrated that it hasn't been able to engineer the result it is looking for, so rather than admit its program hasn't worked, it wants to increase the pressure.

  2. The OFT has to recognize that the competitive landscape is changing quickly. The Yellow Pages space broadly defined is very competitive. The best thing the government can do is to stay out of this business. If not, beware of the unintended consequences.

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