The review will look at the structure and competition within the sector and will “consider whether there are any distortions of competition or barriers to entry”.
The OFT says: “The outdoor advertising sector has a complex, multi-levelled structure, with advertising agencies, specialist buyers of outdoor advertising space, outdoor media owners who provide the space, and site owners such as local authorities.”
It will look at the payment of commissions by outdoor media owners affect the incentives of media buyers and potential issues with contracts between local authorities and outdoor media owners that may be detrimental to Local authorities, and in turn tax payers.
One industry insider says that the outdoor industry has tightened up its practices in recent years.
He points out that all the major players such as Clear Channel, JCDecaux, Primesight and CBS Outdoor, are now publicly listed companies with corporate reputations to maintain.
Heather Clayton, senior director of the OFT’s Infrastructure group, says: ’The cost of all forms of advertising is reflected in the price consumers pay for goods and services. This market study into outdoor advertising will take a look at whether the market works well in terms of offering firms and local authorities deals that are fair, competitive and transparent.’
The initial phase of the review is expected to last three months, and the full study is expected to be completed in December 2010.
The Outdoor Advertsing Association chief executive Alan James says that the trade body will provide any information requested as part of the review. He adds that: “it appears that the OFT is principally interested in relationships between individual parties and these are not areas that we would be able to comment on.”
JCDecaux ad Primesite were awarded the National Rail road and rail contracts today.