More Regulation for Yell

Yell Group is unhappy today, but perhaps not all that surprised. The U.K.’s Competition Commission issued its provisional findings on the question of whether price regulation is still necessary in the U.K. (this assumes it ever was) to foster a more balanced competitive environment. While exact remedies will have to wait at least until July, the commission made it clear that it believes some level of control is necessary going forward.

Here is a comment from inquiry group chairperson Diana Guy:

"Yell continues to hold a powerful position in this market and we have found that competition is not working effectively. Prices are capped at the moment and we think that, without this price cap, advertisers would pay more than in a well-functioning market."

Here is how Yell’s John Condron sees it:

"In our increasingly competitive environment, and particularly with the rapid growth of the Internet and the re-entry of BT there is no need for continued regulatory environment."

Our longstanding view is that the U.K. regulators see the competition "problem" as a nail that can only be remedied by the relentless use of a hammer. We see a market that is increasingly competitive, and the competition commission itself concedes that BT will over time become a stronger competitor. We wonder why the urgency to engineer competition when the invisible hand of the market seems to be doing the job, if at its own pace.