Has the OFT failed to see the wood for the trees in the tightly-controlled UK poster market?

The UK Office of Fair Trading’s eagerly-awaited report into competition in the outdoor industry more or less clears the big agency buyers – WPP’s Kinetic and Aegis’ Posterscope – of distorting competition even though the two companies control over 80 per cent of the agency market.

Neither does it seem too worried about the dominance of four giant media owners, JC Decaux, Clear Channel, CBS Outdoor and airport specialist Primesight who control around 95 per cent of the market although it does say it’s going to look into long-term monopolistic relationships with big councils in the UK.

It does worry about the varying (and substantial) rebates prevalent in the industry, all of which find their way to Kinetic and Primesight and some of which then goes back to the media agencies partnering with them and finally the client who’s paying for it all.

But it does seem rather peculiar in any industry for the list price to be way in excess of the real revenue to the media owner. The OFT notes that planning and buying outdoor is a tricksy business, requiring lots of technology and stuff which goes some way to explaining the tangled web of discounts and commissions.

But not up to 30 per cent of the actual space cost surely? It looks as though the lawyers have done a pretty good job of befuddling the OFT over this one anyway.

And the fact remains that it’s very hard for new entrants to make an impression in the outdoor industry without cosying up to Kinetic and Posterscope and paying extravagant commissions.

Has the OFT had the wool pulled over its eyes?

It rather looks like it.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.