Watchdog outlines Preston Bus disposal
THE Competition Commission has published the proposed terms under which Stagecoach must dispose of Preston Bus.
The transport giant bought its smaller rival a year ago for £7m but is now being forced to sell it after the competition watchdog found the merger “substantially” reduced competition in the town.
In November the competition watchdog said a sale was the most effective way to, “restore competition and safeguard passenger interests”. Now the commission has drawn up a 15-page document detailing the disposal conditions Stagecoach must agree to.
It is inviting comments on the undertakings by January 22 before they are put to the company. The acquisition followed 15 months of intense competition 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. It will 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.
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.
The proposed undertakings can be viewed on the Competition Commission’s website at: http://www.competition-commission.org.uk/inquiries/ref2009/preston/pdf/notice_of_proposal_accept_undertakings.pdf.
* The Competition Commission is also investigating local bus markets throughout the UK following a referral from the Office of Fair Trading (OFT).
The OFT decided to scrutinise the sector after it became increasingly concentrated by takeovers, with nearly two-thirds of services now controlled by five large operators.
The regulator completed a five-month study into the £3.6bn industry in August which identified features of the market that could distort, prevent or restrict competition.
The Competition Commission is now calling for evidence from interested parties. It will publish its findings by January, 2012.
