Yell price controls to be eased

Yell is the main company in the UK directories market

Directories firm Yell will be allowed to raise its prices in line with the rate of inflation from March 2008, the UK's competition watchdog has ruled.

The Competition Commission said Yell was less dominant after BT entered into the market, while online advertising may hurt its directories business.

At present, Yell's increases have been limited to less than the inflation rate because of a lack of competition.

Yell said it opposed regulation but would accept the price measures.

'Market power'

The Competition Commission has been investigating the classified directories market for more than a year after the Office of Fair Trading asked it to look into concerns that the sector was uncompetitive.

Earlier this year, the commission said Yell retained a dominant position and competition was not working effectively, despite the fact that BT had re-entered the directories market.

At present, Yell is subject to a yearly price cap on advertising charges of RPI (Retail Price Index) less six percentage points - which will be extended to 2008.

"We expect growing competition will increasingly constrain Yell's prices and that Yell will feel more pressure due to the internet," the commission said in a statement.

"In the meantime, the price control will prevent Yell from exploiting its market power."