The CMA is to remove long-standing undertakings
covering tendered bus services in the Greater
Bristol area.
The undertakings, covering FirstGroup Holdings Limited,
‘FirstGroup’, and local authority bus services, were put in place
following 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 in 1989
that the merger would remove competition for bus services
contracted by the former Avon County Council. Local athorities
tender for – and subsidise – unprofitable bus services to
maintain important transport links for residents.
Badgerline was subsequently renamed FirstGroup Holdings Limited
(a subsidiary of FirstGroup plc), which then became subject to
the 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.
The Competition and Markets Authority (CMA) has
been reviewing the
undertakings since January 2017 to consider if there has
been any change of circumstances which would justify the removal
or variation of the undertakings.
During the investigation it was found that FirstGroup’s share of
tendered bus services in the region has reduced significantly
since the MMC report and
that in the most recent tender rounds, FirstGroup did not win any
contracts at 3 of the 4 Local Transport Authorities.
The CMA engaged with
local stakeholders during the investigation, none of which argued
that the undertakings were having a beneficial effect and should
be retained.
In June, the CMA launced a
consultation on its provisional decision to remove the
undertakings. No representations were received and
the CMA has therefore
decided to release the undertakings. A notice of release of
undertakings is published alongside the CMA’s final
decision.
