Stagecoach ordered to sell Preston Bus

TRANSPORT giant Stagecoach must sell Preston Bus after the Competition Commission found the merger had “substantially” reduced competition.

In a statement the commission said a sale was the most effective way to, “restore competition and safeguard passenger interests”.

Preston Bus was acquired in January for £7m leaving just one bus company in the town. The deal followed 15 months of intense competition between the two operators when stagecoach ran loss-making routes against Preston Bus.

The commission first mooted Stagecoach’s sale of the business in September as one of several measures designed to restore competition. Today it said it would approve the successful bidder to ensure that it is capable of operating as an effective competitor to Stagecoach.

The sale includes a bus depot, other assets and a network of routes, including services formerly run by Preston Bus but since transferred to Stagecoach.

Competition Commission deputy chairman Dr Peter Davis said: “We found that this merger resulted in a substantial reduction in competition that would, in our view, have an adverse impact on passengers in Preston, leading to a worsening in fares and other factors such as service levels.

He added: “In summary, we came to the view that it will be beneficial to restore competition to a similar level to that which existed before the abnormal, loss making activities that immediately preceded the acquisition.”
 
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.

Following the deal – approved by employee shareholders – the business became part of Stagecoach North West which employs 1,400 and operates 530 buses in Lancashire and Cumbria.