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.