Regulator Boosts Competition in Outdoor Advertising
Clear Channel and JCDecaux, two of the major outdoor advertising companies, have agreed to make changes to the way they enforce contracts with Local Authorities for advertising on bus shelters and information panels.
The voluntary assurances mean that potential competitors will now be in a stronger position to compete for contracts coming up for tender and will have a greater opportunity to enter alongside existing contracts, particularly where they are proposing new forms of street furniture advertising.
The OFT opened a competition investigation into street furniture advertising contracts held by the two companies following its 2011 market study into outdoor advertising. As a result of the assurances it has received, the OFT has now closed its investigation. It has made no finding of any infringement of the Competition Act 1998 and none should be assumed from the offering of these assurances.
Both companies have now offered voluntary assurances. Among other things, the parties have agreed:
Not to enforce exclusivity clauses which prevent competitors advertising on different types of street furniture from those covered by the contract, in locations more than 25 metres from existing street furniture advertising sites.
Not to enforce tacit renewal clauses which currently allow contracts to be rolled over automatically once they reach the end of their term.
Not to proactively seek extensions which have led to some existing contracts being lengthened rather than going out to tender at the end of the initial term.
To co-operate with the Local Authorities to transfer to a new operator when a contract comes to an end.
The OFT has today also published recommendations to Local Authorities on the way they award street furniture contracts, to help encourage stronger competition.
Ali Nikpay, Senior Director at the OFT, said: “We are pleased that Clear Channel and JCDecaux have offered to give these voluntary assurances in relation to their street furniture contracts with Local Authorities.
“We believe these assurances, combined with our recommendations to Local Authorities, will help open up the UK’s outdoor advertising market to greater competition.”
The OFT intends to publish the end dates of all existing street furniture contracts, once these have been confirmed by the parties and by Local Authorities.
The OFT has now closed its investigation of street furniture advertising contracts under Chapter I of the Competition Act 1998 investigation. Parties have made assurances outlined above in relation to their future behaviour and further analysis is not an administrative priority for the OFT.