6th Aug 2009 07:00
News Release
37/09 6 August 2009
EASTBOURNE BUS MERGER HAS REDUCED COMPETITION
Stagecoach's purchase of two previously competing bus companies in Eastbourne will lead to a substantial lessening of competition, the Competition Commission (CC) has provisionally concluded today.
The CC has been investigating the completed acquisitions of Eastbourne Buses Limited (Eastbourne Buses) and Cavendish Motor Services Limited (Cavendish) by Stagecoach Group PLC (Stagecoach), following a referral by the Office of Fair Trading (OFT) in May. Prior to the acquisition, Eastbourne Buses and Cavendish provided local bus services in Eastbourne and Hailsham.
CC Deputy Chairman and Chairman of the Inquiry Group, Dr Peter Davis, said:
These two companies were in active competition with each other before Stagecoach bought both of them. Without Eastbourne Buses and Cavendish coming under common control, we consider it likely that these companies would have continued to compete, providing bus services in the Eastbourne area, although potentially on a somewhat reduced scale.
The evidence we've examined shows that other companies are reluctant to enter the local bus market to take on the merged operation, while competition between buses and other forms of transport, in particular private cars, is not sufficient to prevent the merged operator taking advantage of the loss of competition. In that situation, we have provisionally concluded that the merger can be expected to result a substantial loss of competition.
In the next stage of the inquiry, we will go on to consider what measures should be put in place to restore competition or protect the interests of passengers in other ways. In choosing any remedy we will also consider whether there are consumer benefits that result from the merger (for example, as a result of an integrated timetable).
The CC's provisional findings report is published today at www.competition-commission.org.uk, along with a notice of possible remedies to address the loss of competition. Remedy options being considered include a requirement to sell parts of the acquired businesses, measures to encourage new entry by other operators, as well as controls on fares and requirements to maintain service levels. At the same time, the CC will also consider any customer benefits arising from the merger.
The CC will consider these before publishing its final report by 27 October 2009. The CC would like to hear comments on the provisional findings and notice of possible remedies from any interested parties, in writing, by 27 August 2009. To submit evidence, please email [email protected] or write to:
Emily Chissell
Inquiry Manager
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
3. The members of the Stagecoach/Eastbourne/Cavendish Inquiry Group are: Peter Davis (Chairman), Alexander Johnston, Malcolm Nicholson and Roger Witcomb.
4. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
5. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.
6. Enquiries should be directed to Rory Taylor or John Park on 020 7271 0242 (email [email protected] or [email protected]).
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