Competition Commission to Go On the Buses

UK consumers spend between £3.5-£4.0bn on bus tickets each year. But the OFT believes that a lack of fair competition means that bus passengers are not getting fair value for money. So the OFT has referred the UK bus market to the Competition Commission who will investigate the nature of competition in the market and make recommendations for change. The referral is covered here in the Times. You can also follow the investigation here on the Competition Commission website.

The OFT’s initial review of the market identified a number of features of local bus markets that could prevent, restrict or distort competition in the sector. These relate both to commercial services and services subsidised by local transport authorities. Issues include:

• a situation where the majority of local routes are operated by a small number of large bus companies
• higher fares in those areas where operators with a strong market position are not challenged by a large, well-resourced rival
• many complaints alleging predatory behaviour of incumbent firms designed to eliminate competition from new entrants, and
• low numbers of bids for supported service contracts in many areas, with just one bidder for a quarter of tenders.