OFT refers local bus services to Competition Commission
The Office of Fair Trading (OFT) has today referred UK local bus services, excluding London and Northern Ireland, to the Competition Commission.
This decision follows consultation on the results of an OFT market study into the industry. The study found evidence that limited competition between bus operators tends to result in higher prices and lower quality for bus users and may represent poor value for money for taxpayers.
The study identified a number of features of local bus markets that could prevent, restrict or distort competition. These relate both to commercial services and services subsidised by local transport authorities. Issues include:
•a stable and concentrated national market picture where large national operators appear to largely respect each others' territories;
•the majority of local services, in many different local areas, being operated by a small number of large bus companies;
•complaints alleging predatory behaviour of incumbent firms designed to eliminate competition from new entrants; and
•low numbers of bids for supported service contracts in many areas, with just one bidder for a quarter of tenders.
The study also found evidence that fares are higher in those areas where operators with a strong market position are not challenged by a large, well-resourced rival.
Heather Clayton, OFT senior director, said:
“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. This is certainly not about a return to 'bus wars ' or unmanaged 'head to head ' competition on every route, but we do think large bus operators should face a healthy level of competitive constraints.
“Given the size and importance of this industry, with at least £1.2 billion coming from the public purse every year, the OFT believes that it is appropriate for the Competition Commission to investigate how, in its various forms, competition can be harnessed to deliver what passengers want and the best value for money for the tax payer.”
