12th Jan 2006 15:00
Office of Fair Trading12 January 2006 10/06 12 January 2006 OFT TO REVIEW UNDERTAKINGS FROM FIRSTGROUP PLC RELATING TO THE ACQUISITION OF SB HOLDINGS LTD The OFT is to review undertakings given by FirstGroup that regulate bus fares inparts of Central and Lowland Scotland and also provide in essence a package ofanti-predation undertakings covering parts of this area. The undertakings were accepted by the Secretary of State for Trade and Industryon 17 January 2002 following an investigation by the Monopolies and MergersCommission (now the Competition Commission) in 1997 into the purchase of SBHoldings by FirstGroup. FirstGroup has been applying the fare cap element of the undertakings - whichinvolved a price freeze and then fare increases limited to the change in RPIsince1997/98. The OFT review will examine a number of matters including: • whether competition among bus companies has changed in Central and Lowland Scotland since 1997 • how the impact of changes in fuel prices and duty and other costs suchas drivers and staff costs generally has affected FirstGroup's operations giventhe link of fares to changes in RPI • the views of other interested parties such as passenger transportauthorities, local authorities, trade associations, passenger organisations andother bus companies. The OFT has a duty to review undertakings to consider whether there has been achange of circumstances and whether the undertakings remain appropriate. It canrecommend that the undertakings should be kept in place, varied, removed orreplaced. FirstGroup has submitted that the undertakings should be removedbecause of significant changes in the market. The OFT invites interested parties to send their views by 26 January 2006 to MrsC Bowley at: OFT, Fleetbank House, 2-6 Salisbury Square, London EC4Y8JX (e-mail:[email protected]) NOTES 1. FirstGroup (formerly Firstbus) acquired SB Holdings in June 1996 and broughttogether the two major bus operating companies in central and south eastScotland. The merger was referred to the Monopolies and Mergers Commission whichreported in January 1997 that the merger operated against the public interest (Areport into the acquisition by FirstGroup (formerly FirstBus) plc of SB Holdings- Cm 3531). 2. The MMC recommended that FirstGroup should be required to divest its MidlandBluebird operation together with one of SBH's Glasgow depots and routes.Following an extensive review of the Scottish bus market by the OFT, theSecretary of State announced on 31 July 1998 that she had decided to seekbehavioural undertakings from Firstgroup. These undertakings were intended toregulate prices and minimum service levels, and included restrictions on fareand frequency changes, journey intervals and competition against tenderedservices. 3. The undertakings have two elements: a fare cap covering most of FirstGroup'sFirst Glasgow, Midland Bluebird and Lowland operating areas and a package ofessentially anti-predation undertakings covering the Midland Bluebird andLowland areas. This review will consider both elements of the undertakings. 4. FirstGroup has been applying the fare cap since September 1997 in Glasgowand since February 1998 in the Midland Bluebird and Lowland operating areas, inadvance of the undertakings being finally agreed. The OFT has received asubmission from FirstGroup setting out why it thinks that the fare cap should beremoved in the First Glasgow, Midland Bluebird and Lowland operating areas, andwhy the anti-predation undertakings should also be removed. 5. Under section 88(4) of the Fair Trading Act 1973, the OFT has a duty to keepunder review the carrying out of these undertakings, and from time to time toconsider whether, by reason of any change of circumstances, the undertakings areno longer appropriate and either the parties can be released from them or theundertakings need to be varied or superceded by new ones. 6. Full texts of the undertakings are available from Steven Clarke, MergersBranch, OFT (telephone 0207 211 8586, fax 0207 211 8916, e-mail:[email protected]) MEDIA enquiries: 020 7211+ Corinne Gladstone 8899 Julia Smith 8898 Roger Hislop 8133 Kate Wilcox 8901 Mark Kram 8900 Mike Ricketts 8904 [email protected] Out of hours: mobile: 07774 134814 messages: 020 7211 8961 Copies of press notices: Ext. 8993 http://www.oft.gov.uk PUBLIC enquiries: 0845 7224499 [email protected] OFT reports and consumer information leaflets are available free from: OFT, PO Box 366, Hayes UB3 1XB 0800 389 3158 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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