End to Yellow Pages ad price cap

Yellow PagesA price cap on advertising rates at Yellow Pages is to be removed after the Office of Fair Trading (OFT) signalled it was no longer necessary.

The current set of controls came into force in 2007, when the Competition Commission said prices for classified advertising in the Yellow Pages were higher than they would have been in a well-functioning market.
But the OFT has now said it believed this was no longer the case, given the growth in internet access and its usage by both consumers and advertisers.

It has opened a month-long consultation but said it expects to advise the Competition Commission that it should consider releasing Yellow Pages owner Hibu - formerly known as Yell - from the undertakings.

The current price cap limits price rises to in line with inflation, compared with an inflation minus 6% price control in the mid 2000s, while the company also faces restrictions on its ability to publish second tier directories and themed guides.

It is also required to provide the OFT with a comprehensive advertising rate card, as well as accounts relating to its printed regulated directory business.

The company, which has long argued that no regulation is needed, is increasingly focusing on digital operations as it looks to offset the pressure on its printed directories operation.

It has rolled out eMarketplace, which will provide small businesses with the infrastructure to sell online without having to set up their own website.

Yell is also mulling a capital restructuring as it looks to make inroads into its £2.2 billion debt mountain.

But it has admitted that this could result in shareholders' interests being diluted, hinting that it may give away shares to lenders in exchange for writing off some of its debts.

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