By Max Clarke
The Office for Fair Trading (OFT) has today published its market study into the outdoor advertising industry which has found that the sector is broadly competitive amongst both specialist buyers and media agencies.
As part of the study, the OFT looked at whether the payment of rebates by outdoor media owners to specialist buyers could affect incentives and worsen the deals offered to advertisers. It found that competition between buyers and between agencies ensured that the majority of these rebates pass through to advertisers.
However, the OFT found some potential for rebates to distort how campaigns are booked and increase the price that advertisers pay. To address this, it recommends that advertisers should take steps such as using media auditors to monitor campaigns to ensure agencies and specialist buyers act in the advertiser's best interests. In addition, advertisers should consider negotiating contracts which explicitly set out how rebates are to be treated.
The study also looked at potential barriers to entry and expansion for media owners. As a result the OFT has opened an investigation into contracts entered into by each of two media owners, Clear Channel and JCDecaux, with some local authorities relating to advertising on street furniture such as bus shelters and information panels. In particular, the OFT will consider the long durations and potentially restrictive terms of these contracts.
The OFT has written to these two media owners to explain that there are reasonable grounds for suspecting that the agreements restrict competition, within the meaning of the Competition Act 1998 and/or Article 101 of the Treaty on the Functioning of the European Union. The OFT's investigation is at a very early stage and no assumption should be made that any of the agreements infringes competition law.
Heather Clayton, OFT Senior Director of Infrastructure, said:
'While there is evidence that competition broadly works well for larger purchasers of outdoor advertising, our study shows that advertisers could do more to ensure that they get a good deal from specialist outdoor buyers and media agencies.
'There are some concerns around barriers to entry and expansion for media owners and the OFT has launched a competition investigation in order to assess whether certain street furniture agreements are compatible with UK and EU competition law. No assumption should be made at this stage that there has been an infringement of competition law.'