13 June 2006
Poor competition is continuing in the phonebook market, with the overwhelming majority of consumers still only using the Yellow Pages, the Competition Commission (CC) has said.
For this reason, the commission has decided to keep price restrictions on advertising in place, as Yell, the owner of Yellow Pages which has 75% of the market, could charge very high advertising fees in the face of poor competition.
"Yell continues to hold a powerful position in this market and we have found that competition is not working effectively," said Diana Guy, the inquiry group chairman.
"Prices are capped at the moment and we think that, without this price cap, advertisers would pay more than in a well functioning market."
Despite the worries over competition, there were signs that the re-entry of BT into the marketplace could make a difference.
"We accept that BT's re-entry into this market in the last few years is, potentially, a very significant development, and BT has been growing rapidly. However, its market presence is still small compared to Yell's, and Yell has continued to grow its revenues," said Ms Guy.
"In deciding how long any price control might be needed, we will take account of the changing nature of this market."
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