Electrical Contracting at Exhibition Halls in London: A report on the supply in Greater London of electrical contracting services at large exhibition halls

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On 10 May 1989 the Director General of Fair Trading (the DGFT) asked the Commission to investigate the supply in Greater London of electrical contracting services at large exhibition halls (the reference services). We established that a monopoly existed in favour of five electrical contractors who are tied to certain of the large exhibition halls (the hall tie). These contractors have around three- quarters of the market for reference services which was worth some £8.3 million in 1988.

The reference services are a very small segment of an increasingly important exhibitions industry which is characterised by a shortage of space, particularly a shortage of large venues, and a consequent need for fast turnround times. The direct financial impact of electrical contracting services on the industry cannot be very great but these services are a crucial element in mounting exhibitions.

We find that in a number of respects the tied electrical contractors' behaviour is against the public interest:

(a) their failure always to show their prices separately from the hall charges for electricity and mains connections impedes comparison of prices;

(b) their payment of commission to hall owners and/or exhibition organisers distorts competition between electrical contractors; and

(c) their tie to the halls:

(i) restricts competition between electrical contractors for work at those halls;

(ii) discourages new entry into electrical contracting at those halls; and

(iii) inhibits the growth of potential competition in the supply of the reference services.

We recommend that electrical contractors should publish their prices and in doing so clearly distinguish their prices for hire and installation of electrical fittings from any associated charges. As to their payment of commission, we recommend that the practice should be prohibited.

Devising a suitable remedy in respect of the hall tie is not easy. We reject as impracticable the so-called `free-for-all' under which each exhibitor would be free to choose his own electrical contractor. Freedom of choice for the exhibition organiser is, however, a different matter. There is a significant difference between the hall tie and independent nomination by organisers in the effects on competition. Although they both deny freedom of choice to the exhibitor, there are many more organisers than hall owners and this provides more opportunities for electrical contractors to compete for work, and allows a greater number of electrical contractors to remain in the market as principal contractors. Protection for hall owners against unsafe or shoddy work would remain in their rights of inspection and their control of connection to the mains supply.

There has been some increase in concentration amongst organisers. We estimated that in 1988 the five largest organisers had between 40 and 50 per cent of the United Kingdom market. Nevertheless, in the existing state of the market, we believe that organiser choice of electrical contractor would improve competition because the organisers presently have less market power than the hall owners. The three halls at Earls Court and Olympia plus Wembley and Alexandra Palace accounted for nearly three-quarters of the hall space available at reference halls in 1989, and the shortage of exhibition space in Greater London has enhanced the dominance of this handful of tied halls.

The position could change if concentration amongst organisers increases to any great extent. The DGFT will no doubt watch for further increases in organiser concentration and make a further reference to the Commission if that is appropriate.

Our recommendation regarding the hall tie is that the practice of hall owners requiring their tied electrical contractors to be employed either wholly or partly for the supply of electrical contracting services at large exhibition halls in Greater London should not be allowed.

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