Sector: Transport

A recent decision by the Office of Fair Trading (OFT) to refer local bus services to the Competition Commission (CC) has caused uproar among bus businesses.

The OFT, whose recent market study concluded that low levels of competition in bus markets is a bad deal for passengers and taxpayers alike, worries about a tendency towards monopolies or near-monopolies on local and regional routes, as well as overly high entry barriers into local markets.

It also alleges that operators with a strong market position can charge 9 per cent more than companies that are up against a well-financed local rival, and expressed concerns that certain bus operators have been boosting income by manipulating the concessionary fares regime.

All local services in the UK, except those in London and Northern Ireland, will now be subjected to a more detailed public investigation by the more powerful CC, with its investigation covering large quoted operators such as FTSE 250-traded First Group and Stagecoach, as well as services run by local authorities.

‘One of the concerns that we think the Competition Commission should take a look at is the tendency for local areas to become dominated by a single operator,’ warned OFT senior director Heather Clayton. ‘We do think large bus operators should face a healthy level of competitive constraints.’

In response, irked bus operators criticised the decision to refer local service operators to the CC as ‘pointless’ and a waste of taxpayers’ money.

A Stagecoach spokesperson described the inquest as an ‘unnecessary distraction for the bus industry at a time when we should be free to get on with trying to improve bus services for passengers’.

The mood was equally fiery at First, which complained about the timing of the referral, saying that it could become ‘an unnecessary and costly distraction from the objective of improving traffic congestion in our towns and cities’.