OFT Refers Local Bus Merger in North Devon to Competition Commission
The OFT has referred Stagecoach Group PLC’s (Stagecoach) anticipated acquisition of the North Devon business and assets of First Devon and Cornwall Limited (First) to the Competition Commission, due to concerns the merger will reduce competition in local bus services in the area.
Stagecoach and First operate competing local bus services in North Devon, including in and around the town of Barnstaple. The OFT is concerned that the proposed merger would reduce competition on a number of route sections where the parties currently compete and create a monopoly for several journeys in the area around Barnstaple.
Given this expected reduction in competition, the OFT considers it appropriate to refer the merger to the Competition Commission for an in-depth review.
Although the annual value of the markets concerned is comparatively limited (between £2.5 million and £3.2 million), the OFT considers that the potential impact of the merger in terms of harm to passengers in North Devon is particularly significant. The OFT is also mindful that, as the Competition Commission noted in its recent market investigation report, mergers involving the sale of local bus operations are highly replicable across the country; this fact reinforces the OFT’s view that a reference to the Competition Commission is appropriate in this case.
Amelia Fletcher, Senior Director and Decision Maker in this case said: “The Competition Commission’s market investigation into the bus industry showed how important competition between bus operators at local level is.
“Mergers between rivals in local markets can result in price rises or a reduction in journeys for passengers.
“As such, we believe it is appropriate that the Competition Commission reviews this merger in detail to ensure that the interests of passengers in Devon are protected.”
The Competition Commission is expected to report by 24 December 2012.