Classified directory advertising services

5 April 2005

The OFT has referred the classified advertising services market to the Competition Commission for investigation.

This follows a seven-month study into the market and the effect of undertakings. These placed a cap on advertising prices in Yellow Pages and a restriction on the publication of local Yellow Pages directories in order to address concerns about high prices and the undermining of effective competition.

The OFT has continued concerns that competition in the market is not operating effectively. The structure of the market remains highly concentrated with Yellow Pages and Thomson Local directories accounting for over 90 per cent of supply in the UK: barriers to entry are high due to strong branding and network effects. Profits appear high and there seems limited competitive pressure on prices. While there has been some new entry to the market – notably, British Telecommunications re-entered the market in 2003 – the OFT does not believe recent entrants have strengthened competition to a material degree.

Download reasons for reference (pdf 192 kb).

See terms of reference.

See press release.

Background

The OFT announced its study of the market for classified directory advertising services under section 5 of the Enterprise Act 2002, on 18 August 2004. 

The study examined how the market is working, and included an assessment of the effect of the undertakings by Yell Ltd within that market, and the effect of any changes in the market since the undertakings were given in 2001. During the course of the study the OFT sought the views of major industry participants. 

Announcement of study - see statement.

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