OFT Refers Local Bus Merger to the Competition Commission
The OFT has referred the completed acquisition by McGill’s Bus Services Limited (McGill’s) of the Arriva Scotland West local bus business to the Competition Commission.
The Competition Commission has carried out a market investigation into the local bus industry. The final report was published on 20 December 2011.
McGill’s and Arriva Scotland West operate competing local bus services in Renfrewshire and East Renfrewshire, to the west of Glasgow, including the town of Paisley. The OFT is concerned that, because of their strength in this area compared to other operators, the merger will result in a loss of competition of local bus services in this area.
The merger reduces competition on a number of sections of routes where the parties previously competed, and creates a monopoly for sections of some journeys. Furthermore, the OFT is concerned that the merger removes the potential competitive constraint that each party exercised on the other across the Renfrewshire region.
Although there are other bus companies operating at some level in this region, the OFT is concerned that the main constraint that each of the merging parties faced in terms of restricting entry and expansion by rival operators was from the other.
Ali Nikpay, Senior Director and Decision Maker in this case, said: “The Competition Commission’s market investigation into the bus industry shwed how important competition between bus operators at a local level is.
‘Where local competition exists, the OFT will look carefully at mergers between rivals that have the potential to 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 this part of Scotland are protected’.
The Competition Commission is expected to report by Tuesday 2 October.