More Regulation for Yell

Yell Group is unhappy today, but perhaps not all that surprised. The U.K.’s Competition Commission issued its provisional findings on the question of whether price regulation is still necessary in the U.K. (this assumes it ever was) to foster a more balanced competitive environment. While exact remedies will have to wait at least until July, the commission made it clear that it believes some level of control is necessary going forward.

Here is a comment from inquiry group chairperson Diana Guy:

"Yell continues to hold a powerful position in this market and we have found that competition is not working effectively. Prices are capped at the moment and we think that, without this price cap, advertisers would pay more than in a well-functioning market."

Here is how Yell’s John Condron sees it:

"In our increasingly competitive environment, and particularly with the rapid growth of the Internet and the re-entry of BT there is no need for continued regulatory environment."

Our longstanding view is that the U.K. regulators see the competition "problem" as a nail that can only be remedied by the relentless use of a hammer. We see a market that is increasingly competitive, and the competition commission itself concedes that BT will over time become a stronger competitor. We wonder why the urgency to engineer competition when the invisible hand of the market seems to be doing the job, if at its own pace.

This Post Has 2 Comments

  1. Ben

    It will be interesting to watch how these cases evolve over time given the impact of the internet on the existing yellow pages competitive advantages that allow monopolies.

    While they may not really be quite as bad as Tony Soprano they do exhibit some tough behavior as this case points out.

  2. Charles

    Thanks for the post Ben. I’ve always though Tony Soprano was simply misunderstood.

    Seriously, I am not a fan of monopolies, or the behavior it encourages. I do think the UK market would become more, not less competitive if the rate cap were lifted. Yell’s US unit Yellow Book exploited a huge price umbrella to get where it is. The regulators in the UK have taken that price umbrella away, and they wonder why the outcome never changes.

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