MPs call for more bus competition evidence

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TSC to investiagte Competition Commission’s report into bus industry

The Transport Select Committee (TSC) is to undertake an inquiry into the Competition Commission’s (CC) report on the local bus services market.

The Competition Commission recently reported on its lengthy investigation into the local bus services market in the UK, excluding London and Northern Ireland. It concluded sustained head-to-head competition between bus operators was uncommon and bus operators avoided competing in other operators’ core territories. As a consequence there were “adverse effects on competition”. These led to a detriment to consumers – less frequent, poorer quality services and possibly higher fares – valued at £110m-£295m a year. In addition, lack of competition may be costing local authorities £5m-£10m a year through higher contract prices for tendered services.

The CC recommends a series of measures intended to increase head-to-head competition. These include more multi-operator ticketing, longer notice periods for service changes, closer monitoring by the OFT of bus company mergers and incentives through revisions to BSOG. It considered whether bus services should be awarded under franchises (as in London) but concluded enhanced competition was generally the better solution.

The CC’s findings have been criticised by the bus industry as unrealistic. The passenger transport executives have expressed disappointment because the CC did not recommend franchising (Quality Contracts).

The TSC is inviting evidence, particularly in relation to the following:

  • Has the Competition Commission addressed the issues of most importance to the bus passenger?
  • How effective are the remedies proposed by the Competition Commission likely to prove?
  • Is sustained head-to head competition feasible or desirable?
  • What role should Quality Partnerships play?
  • Has the Competition Commission adequately considered the franchising option?
  • What action should local government and central government now take?

The Committee would be grateful to receive written submissions by Friday, February 17.

Commenting on the news, the Confederation of Passenger Transport UK said: “This came as quite a surprise. We will look at the terms and submit any evidence which may be of use to the inquiry although it may not differ from our original submission to the Competition Commitee.”

Speaking at a media event last week, Giles Fearnley, First UK Bus MD said the Competition Commision’s mantra was purely looking at competition for the passenger not on the wider economic scenario of the industry. Now the TSC is looking at the findings, Giles said: “We will make the case that we are living in a world where you have to start with the economics of what we’re doing and how much the passenger can afford to pay and should be asked to pay before we introduce competition into that market.”