The CMA is to review long-standing undertakings
covering FirstGroup and local authority tendered bus services in
the Greater Bristol area.
The undertakings followed the 1989 merger of local bus companies
Badgerline and Midland Red West which was investigated by the
Monopolies and Mergers Commission (MMC).
The MMC ruled that
the merger would remove competition for bus services contracted
by the former Avon County Council. Local authorities tender for –
and subsidise – unprofitable bus services in order to maintain
important transport links for residents.
The merged company was therefore required to sign up to a number
of restrictions, including a cap on the amount they could receive
from the local authority for running a tendered service – and a
requirement to return any excess profit from such services.
These undertakings were amended in 1996 following a subsequent
bus merger where both operators became part of FirstGroup.
The Competition and Markets Authority (CMA) has now decided
to review the undertakings to see if there has been a change in
circumstances which justifies their removal or variation.
The CMA is seeking
views in particular from local authorities, bus operators and
bodies representing bus passengers in the Greater Bristol area.
It wants to hear about whether the ability of local authorities
to attract competitive bids has changed in the intervening years,
whether the growth of other operators has increased competition
for tendered bus services and the practical impact of the
undertakings.
Responses are invited via the review case page.
The CMA has also
today published its final advice to
the secretary of state recommending the removal of remedies in 2
merger cases that followed investigations carried out under the
Fair Trading Act.
Today’s actions result from the CMA’s ongoing
programme of work on remedy reviews, initially set out in
the CMA’s 2015/16 annual plan,
with the aim of reducing burdens on business by assessing whether
past merger and market remedies should be removed or varied when
they are no longer necessary. Since its creation in 2014,
the CMA has launched
96 remedy reviews, around two-thirds of which have resulted in
the removal of the remedy.
For more information see the remedies review case
page.
