Roadside Advertising Services (Hansard, 12 May 1982)

§ Dr. Vaughan

The Director General of Fair Trading has now completed the discussions which my right hon. Friend the then Secretary of State invited him to undertake, following the publication of the commission's report on 1 July 1981, with British Posters Ltd. and its 10 member companies and with the two trade associations mentioned in the report. As a result of these discussions, British Posters Ltd. and the two trade associations have given certain undertakings to my right hon. and noble Friend.

The commission found that scale and complex monopoly situations existed in favour of British Posters Ltd. and its member companies and concluded that these monopoly situations operated against the public interest.

The commission noted that certain of the adverse effects on the public interest arose from the existence of British Posters Ltd. in its present form, and it was satisfied that it would not be possible to amend its constitution whilst retaining its existing membership or a broadly similar membership, without retaining the substance of these adverse effects. The commission therefore recommended that British Posters Ltd. should cease to exist and should not be reformed. My right hon. Friend the then Secretary of State accepted the recommendation, and at his request the Director General secured the following undertakings from British Posters Ltd.:

(1) To cease trading on or before 31 March 1982;
(2) To wind up the company as soon as practicable thereafter.

In addition to the main findings against British Posters Ltd. and its member companies, the commission found a complex monopoly situation to exist in favour of the two trade associations covering all the significant poster contractors—the British Poster Advertising Association and the Solus Outdoor Advertising Association—by virtue of provisions in their joint standards of conduct requiring their members not to bid or negotiate for, nor interfere with, sites occupied by a fellow member of either association. This restricted competition in the acquisition of sites and the commission took the view that this feature operated against the public interest. My right hon. Friend the then Secretary of State accepted this view, and at his request the Director General secured undertakings from the two associations that they would delete the offending provisions—clauses (a)-(d) of their 1980 standards—and not introduce anything to a like effect.

In addition to negotiating the closure of British Posters Ltd., the Director General also held discussions with the member companies of British Posters Ltd. aimed at establishing criteria for the future joint marketing of 250W roadside advertising panels which did not give rise to the adverse effects upon competition which the Monopolies and Mergers Commission had identified in respect of British Posters Ltd. However, although the individual companies approached these discussions in a constructive and co-operative manner, the Director General was unable to reconcile the conflicting commercial interests of the 10 member companies with an outcome which he could recommend to my right hon. and noble Friend. He therefore reported that it was not possible to reach an acceptable solution and advised on alternative courses of action.

My right hon. and noble Friend has weighed these carefully and has accepted the Director General's advice that it would not be appropriate for him to use his powers under section 56 of the Fair Trading Act to impose criteria upon the industry. Following the announcement by British Posters Ltd. that it would cease trading on 31 March 1982, a number of new methods of packaging poster sites have come onto the market. These include the major companies offering regional campaigns with sites contracted in from other companies, and a greater role for the independent specialist poster bureaux. In these circumstances, my right hon. and noble Friend believes that it is right to allow the industry a period during which it can react to the closure of British Posters Ltd. and the changes to the trade associations standards of conduct before deciding whether further Government intervention is necessary or desirable. He has therefore asked the Director General to keep a close watch on developments over the next two years and to advise within that period on what action, if any, Is desirable. In order to enable the Director General to monitor developments, he has asked him to obtain undertakings from each of the 10 members of British Posters Ltd. that they will inform him of any joint marketing arrangement to which they become a party.