Monday 16 May 2011

Competition Commission interim report

David Gambles reports:
CC ‘looks for more competition’ 
The Competition Commission (CC) says it “is looking at ways to open up more bus markets across the country” after concluding that “too many operators face little or no competition in local areas.”
It follows 17 months of investigations into local bus services (excluding the regulated London and Northern Ireland markets)
Publishing its summary of provisional findings this morning (Friday), it says that although there are 1,245 bus operators, the “great majority of routes and local areas” experience a high degree of concentration and “the largest operator has consistently faced little or no competition,”
The CC also concludes that the way local authorities tender for supported services, and the limited number of potential bidders, can restrict competition and increase cost.
The CC will now consult “on measures to open up more markets by tackling the factors which can hinder competition.”  
It will also “seek views on whether Local Transport Authorities (LTAs) should take measures to encourage competition,” including whether franchising might be required in cases where there has been a “particularly marked failure of competition.”
However, the CC’s proposed “remedies to address competition problems” fall short of divestment, and it accepts that head-to-head competition is generally destructive and results in the exit of one company.
Instead, its proposed “remedies” include:
•            Measures to increase the number of multi-operator ticket schemes and ensure that these are effective and attractive
•            Restrictions on aggressive behaviour, such as ‘overbussing’ and other obstructive behaviour aimed at reducing a rival’s ability to compete
•            Ensuring fair access to privately-owned and managed bus stations for all operators
•            Recommendations to LTAs on the circumstances in which to pursue Quality Contracts, or franchising, in areas most affected by lack of competition
•            Recommendations to LTAs on how to use other powers (e.g. Quality Partnerships) to promote competition or “improve outcomes to local consumers”
•            Recommendations to the DfT to update its best practice guidance on supported services; to the Scottish Government and Welsh Assembly to develop “suitably tailored guidance” and to LTAs to follow this guidance, to increase the number of operators bidding
•            Measures to make more information available to LTAs and potential bidders about the performance of supported services

Richard Lomas adds:
The full interim report can be found here.
Nottingham was used as a case study which appears as an appendix to the report.