OFT reports on Yellow Pages undertakings

The Office of Fair Trading has today published its provisional findings that undertakings given by Yell Group plc ('Yell' now known as hibu plc) relating to its Yellow Pages business may no longer be appropriate and that the Competition Commission should consider whether the company should be released from them.

Yell gave the undertakings in 2007 after a Competition Commission market investigation found that the company's market power meant that prices for classified advertising in the Yellow Pages were higher than they would have been in a well-functioning market. Under these undertakings:

·; Yellow Pages advertisement rates are subject to a cap.

·; Restrictions apply to Yell's ability to publish second tier directories and themed guides.

·; Yell is required to provide to the OFT a comprehensive advertising rate card, as well as accounts relating to its printed regulated directory business.

In line with its duty under the Enterprise Act 2002, the OFT has reviewed these undertakings to consider whether they are still appropriate. Based on its own research, an external report and surveys, and discussions with industry players, the OFT has provisionally found that there has been a change of circumstances, and that the Competition Commission should consider whether it would be appropriate to release Yell from these undertakings.

The OFT's review has provisionally found that the major driver of change has been the growth in internet access and usage by both consumers and advertisers which has led to a potentially broader range of competitive constraints on suppliers of printed directories.

Nisha Arora, Director in the OFT's Services, Infrastructure and Public Markets Group, said:

'We have provisionally found that the market has undergone change, and as a result we are proposing to advise the Competition Commission to consider releasing Yell from the undertakings agreed in 2007. Third parties now have the opportunity to comment on our provisional findings.'

The consultation on the OFT's provisional findings will be open until 21st September 2012. If the OFT concludes that there has been a change in circumstances, it would expect to provide its final advice to the Competition Commission later this year. The Competition Commission would then be responsible for deciding on any changes to the undertakings.

NOTES

1. Download the OFT's provisional findings. On 27 July 2012, Yell Group plc changed its name to hibu plc. For the purposes of this report, given that Yell Group plc gave undertakings to the Competition Commission in 2007, it should be noted that references to Yell refer now to hibu plc.

2. The Competition Commission's Classified Directory Advertising Services market investigation report and undertakings are available on the Competition Commission website. This followed a market investigation reference by the OFT in 2005.

3. Under section 162 of the Enterprise Act 2002, the Office of Fair Trading has a general duty to keep under review undertakings given under the Act and to consider whether, by reason of any change of circumstances, an undertaking is no longer appropriate and needs to be either varied, superseded, or parties to undertakings need to be released from them. The OFT shall give such advice to the Competition Commission as it considers appropriate in relation to any possible variation or release from such undertakings.

4. It is for the Competition Commission to decide on any changes to the undertakings, based on the OFT's advice together with any additional analysis that the Competition Commission considers necessary to inform its decision.

5. Much of the research and analysis of the sector has been carried out on behalf of the OFT by an external consultant, ICF GHK. Although the OFT has carried out its own research and economic analysis, and has undertaken additional engagement with interested parties, its provisional findings have been informed, in part, by the work of the external consultant. In view of this, the OFT has decided to consult on its provisional findings before considering whether to advise the Competition Commission of a change of circumstances.

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