Only one of four Competition Commission bus industry remedies is to go ahead following a consultation period
The Department for Transport (DfT) has published its response to the consultation on the implementation of Competition Commission (CC) remedies on bus registration. 40 consultation responses were received.
In December 2011, the CC suggested four remedies which it believed would improve levels of competition in the bus industry. These remedies were:
- An extra 14-day pre-notification period during which local transport authorities may review and discuss a registration application with the operator;
- A minimum standard notice period of 90 (as opposed to the current 56) days following acceptance of a change to an existing service registration;
- A restriction on making changes to any registration application during any notice period except by making a short-notice application and alignment of the reasons for any short-notice application to those used in Scotland (to prevent circumvention of the 90 days); and
- A requirement that operators specify the frequency of services currently registered as ‘frequent’ (those with six or more services per hour) with a default band, so only frequencies in excess of this need to be detailed.
Of the four suggested remedies, the first received the most support, primarily from local authorities welcoming additional visibility, though some felt the measure should only apply to wholly commercial services.
Opposition to the measure came mostly from operators, who felt there was no evidence the CC remedy would address competition issues. There was concern about inflexibility preventing operators from responding quickly to unforeseen events, such as changes to school opening times, and delays to service improvements to the detriment of passengers. There was also concern that it would create a barrier to entry, since it would take longer to exit an unprofitable route.
The DfT chose to implement the measure following cost-benefit analysis, believing the benefits would outweigh the cost. The department said a case could be made for improved competition, as new entrants would have at least 14 days to operate before incumbent(s) could respond. The DfT also felt the measure will discourage anticompetitive reactions and predatory behaviour.
Baroness Kramer, Minister of State for Transport, said: “While this only constitutes a partial implementation of the CC’s recommendations in this particular area, this follows full consideration of the consultation responses and the cost benefit analysis undertaken as part of the legislative process.
“The implementation of the 14-day pre-notification period for local authorities makes a material contribution towards meeting the CC’s concerns in a way that builds on government policy to promote partnership working between operators and local authorities.”
