19 September 2009

The Battle For Preston Part Two

"OFT is concerned that this may have a negative impact on price and service levels for bus users”

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We continue our look at Preston to see if what happened there could possibly be of interest here...

31 January 2009 LEP: One week later...
Routes will be axed and timetables changed in a massive shake-up of bus services in Preston. Five services from the bus station will be cancelled and a dozen will have changes made to their route and timetable in proposals announced by Stagecoach. Chris Davies, of Travelwatch North West, said the move could prove "unpopular" with passengers. He added: "Some passengers do suffer. But they (Stagecoach) are there to make a profit on the network and it isn't always in the best interests of passengers."

6 February 2009 LEP: Fares rise for some...
Students will have to pay more for monthly bus tickets in Preston. Stagecoach, which has taken over Preston Bus, has replaced the old bus company's fare system, meaning students now have to pay £32 a month for city centre bus travel instead of £28 – a rise of 14.2%.

10 March 2009 Transport of Delight: Meanwhile...
Last Thursday saw a shock announcement by the Office of Fair Trading (OFT) that astonished the bus industry: it plans to undertake a full investigation into local bus services. The catalyst for the investigation, says the OFT, is the recent spate of take-overs and mergers that have involved the 'big five' operators in the UK and details of whether or not this has been detrimental to the public will be examined and reported on.

28 May 2009 Office of Fair Trading:Bombshell for Stagecoach...
The OFT has referred the acquisition of Preston Bus Limited by Stagecoach Bus Holdings Limited to the Competition Commission. Both Stagecoach and Preston Bus provide local bus services in Preston and, as a result of this acquisition, Stagecoach has become the predominant provider of commercial bus services in this area. Given the absence of any evidence of likely entry in the short to medium term by other bus operators, the OFT was concerned that this could result in higher prices or decreased service quality to local bus users.
The OFT was made aware that Preston Bus was in significant financial difficulties prior to its sale, and carefully considered whether it could be characterised as a 'failing firm'. However, while it is possible that Preston Bus may have failed and gone into administration had it not been sold, the OFT was not confident that all the failing firm conditions were met to the standard required for a first phase investigation. Specifically, it considered that there could have been a more competitive alternative to the merger: given the interest in Preston Bus expressed by other bidders, the OFT could not rule out that Preston Bus' assets could have been used by another operator to enter the market and compete against Stagecoach.
Amelia Fletcher, OFT Senior Director of Mergers, said:
'Stagecoach and Preston Bus were very close competitors, as demonstrated by the so-called 'bus wars' that took place in Preston prior to the acquisition. This merger has removed competition between them and the OFT is concerned that this may have a negative impact on price and service levels for bus users.'
25226-02 (by ian.simpson223@btintern et.com)©Ian Simpson Stagecoach In Lancashire Optare Versa 25226, PX08 FMV at Preston bus station.

3 September 2009 Law Central: Bombshell for Stagecoach...
Two weeks after the OFT referred the sector to the Competition Commission, the CC today released provisional findings on Stagecoach's acquisition of a small operator in Preston. The bottom line? Stagecoach may have to divest part of Preston Bus Limited, which it bought in September 2008, after the CC concluded that the acquisition had restricted competition and potentially harmed the interests of passengers.
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. A spokesman for Stagecoach, one of the UK's largest bus and coach firms, said it did not agree with the CC provisional findings. "Under our ownership, we have given local people access to a more integrated, sustainable, comprehensive, high-quality and affordable bus network," he said. "We saved the jobs of Preston Bus employees from an uncertain future and agreed to secure their pensions when no one else would make that commitment. "Passengers have responded very positively to our investment in local services and more people have been attracted to bus travel." The CC is inviting responses before publishing its final report on the merger in November.

So all that effort to take over Preston Bus and its now looking like they may have to sell it, or at least accept stringent conditions. A further post on the OFT will follow in the next week…

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