Preston Bus deal ‘reduced competition’
STAGECOACH may be forced to sell Preston Bus after the Competition Commission found the merger could lead to higher fares and poorer services.
An inquiry by the commission found that the deal, which left just one bus operator in the town, will reduce competition and potentially harm the interests of passengers.
It is now considering a series of remedies which include forcing Stagecoach to sell all or part of either business, or introducing measures to encourage new entrants to the market. It is also considering controls on fares and requirements to maintain service levels.
The commission stressed that it was also considering any customer benefits arising from the merger. Its final report will be published by November 12.
Preston Bus is understood to have approached Stagecoach about the £7m takeover. It ran into financial difficulties following an intense period of competition from June 2007 to September 2008 when Stagecoach ran loss-making routes in direct competition with Preston Bus.
Employee shareholders at Preston Bus approved a takeover in January. The business is now part of Stagecoach North West which employs 1,400 and operates 530 buses in Lancashire and Cumbria.
Peter Davis, Competition Commission deputy chairman and chairman of the inquiry group, said: “Our provisional view is that the loss of competition caused by this merger could have an adverse impact on passengers in Preston by leading to a worsening in fares and other factors such as service levels.
“Without the merger, we believe the potential or actual competition each company would have faced from the other would have ensured that they maintained or improved their services in order to attract passengers. We are now considering a range of possible remedies to deal with our concerns.”
Preston Bus, which had a turnover of around £11m, operated 14 routes in the city and in South Ribble and had 300 staff before the merger. It was owned by past and present employees and operated 120 buses.
The business was formed in 1986 to take over Preston Borough Council’s transport department. In 1993 the council sold the business to its staff.
