The Office of Fair Trading (OFT) has today published the results
of its long-awaited market study into the outdoor advertising
industry. It concludes:
"There are reasonable grounds for suspecting that certain
contracts entered into by Clear Channel and JCDecaux (media owners)
with some Local Authorities relating to advertising on street
furniture such as bus shelters and information panels restrict
competition".
As a result, the OFT has ordered a formal Competition Investigation
into the local authority street furniture contracts - the first
time it has ever done so following a Market Study.
The OFT are particularly concerned at the long duration of some of
the contracts (15-20 years) and the exclusivity clauses which
prevent new entrants from dealing with local authorities. The OFT
stresses that no final determination has been made yet, but one
possible outcome is that they will find that these type of
contracts infringe competition law.
Chris Corney, leading litigation and public sector specialist at
law firm DMH Stallard comments,
"This has huge implications for local authorities who are
trying to generate revenues from outdoor advertising on public land
and highways. The OFT has concluded that the outdoor advertising
industry generates revenues of £150m p.a. from sites on local
authority land – but local authorities only see a
fraction of this.
DMH Stallard understand that most London boroughs and
major metropolitan authorities in Britain have entered a contract
with either JCDecaux or ClearChannel which falls within the scope
of the Competition Investigation. Any authorities with such a
contract will need to consider whether they may have new
opportunities to generate revenue as a result of the challenge to
these contracts".
DMH Stallard have been advising a group of local authorities
in relation to the OFT's Market Study in pursuing new revenue
generation opportunities for local authorities. The firm will
continue to coordinate submissions to the OFT and would be
interested to hear from any local authorities who would like to
discuss the implications of the OFT investigation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.