OFT proposes referring bus firms to CC

20th Aug 2009 08:57

The Office for Fair Trading (OFT) is proposing to refer the local bus industry to the Competition Commission (CC) after finding evidence that limited competition could be leading to higher prices for bus users.In a five month investigation into the £3.6bn industry, the OFT found a number of features of local bus markets in Britain, excluding London, that could prevent, restrict or distort competition in the sector. These relate both to commercial services and services subsidised by local transport authorities. It found situations where the majority of local routes are operated by a small number of large bus companies, which charge higher fares because of the lack of competition. Major operators Arriva, Stagecoach, Go-Ahead, First Group and National Express control most of the bus services.The OFT also said there were 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.John Fingleton, OFT Chief Executive, said: 'Our investigation has unearthed a range of evidence that suggests the market for local bus services is often not working as well as it should and may be resulting in higher prices for bus users.' 'In addition, this is a market where an estimated £1.2bn comes from public subsidy so restricted or distorted competition can potentially have a significant impact on taxpayers.''We believe that the issues we have identified clearly justify a full investigation and we therefore propose to refer this sector to the Competition Commission.'The OFT is seeking comments on its provisional decision to refer these markets to the CC until 15 October 2009.