OFT refers bus market to Competition Commission

7th Jan 2010 08:22

The Office of Fair Trading (OFT) has referred local bus services to the Competition Commission (CC) after concluding that low levels of competition in many bus markets may be resulting in poor outcomes for bus users and taxpayers. The decision comes after a market study and public consultation carried out by the OFT in 2009. It said it found there was a tendency towards monopolies or near monopolies at local and regional routes and that barriers to entry into local markets made it difficult for competitors to challenge existing operators.The study and consultation also found that operators with a strong market position charge 9% more than operators who are charged by a well-resourced local rival. The OFT added that it has concerns that bus operators have been able to manipulate the concessionary fares regime to increase the amount they are paid for providing these services.The OFT also expressed concerns that many supported services elicit low numbers of bids in response to tenders, which is a concern given that more bids tend to mean lower prices. Roughly a quarter of tenders only receive on bid, it 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,' said OFT senior director Heather Clayton. '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.' The OFT said it considers that there are 12 major bus operating groups in the UK, with First Group, Stagecoach Group, Arriva and Go-Ahead the top four and National Express among the eight smaller groups.