Yell, the classified directories business, has attacked the latest findings of a Competition Commission inquiry into its markets, claiming it finds it “difficult to recognise” the idea that it still dominates directories publishing in the UK.
As it moved quickly to try to head off the threat of renewed regulation, Yell claimed the market for directories publishing had become much more competitive, with powerful new entrants such as BT upping the stakes amid the rising use of internet publishing.
BT used to own Yellow Pages, the directories unit now run by Yell, and was found 10 years ago by the Competition Commission to be a monopoly operator in the market and was forced to cap prices.
But John Condron, Yell’s chief executive, said his group was feeling the effects of new arrivals and had been forced to cut prices to below the level of the cap and concentrate on improving efficiency and customer service.
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“Yell has cut its prices by an average of just under 30 per cent - substantially more than the regulation itself required; and increased its customer numbers by more than 50 per cent,” Mr Condron said.
“Regulation should be about the future, not the past. The Competition Commission is clearly investigating an increasingly competitive marketplace. We will continue to fiercely contest that, in such an environment, regulation is no longer required.”
Mr Condron and Yell were responding to the latest “emerging thinking” document circulated by the Commission as part of its inquiry into the classified directories advertising services market.
The Commission, which has been investigating the area since last April, said this morning that Yell “still enjoys a strong position in the market” and acts as a “barrier to entry”. It said that, despite the arrival of BT, Yell was still “by far the largest provider in a highly concentrated market”.
It said a “network effect” for Yell - where growing numbers of advertisers and users act to spur each other in a growth spiral - benefited existing operators and acted as the barrier to entry.
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Diana Guy, the chair of the inquiry group, said: “From the evidence so far presented it appears that, despite developments in this market, Yell still holds a strong position.
“Yell’s strong position may give it market power and it seems likely that the prices offered to a significant number of advertisers across the market would be higher than at present without the current price cap.”
The Commission stressed that it still hadn’t reached any final conclusions and said it recognised that the market might continue to change over the coming years.
But the threat of renewed price caps or further stringent regulation was enough to send Yell’s shares sharply lower in morning trade.
After an hour, Yell was down more than 4.7 per cent - some 25p lower at 502.25p. It has a stock market value of more than £3.7 billion.
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