On 24 December 2009, the OFT published its decision to approve a request by FirstGroup plc for consent under the undertakings from its acquisition of SB Holdings Limited. In June 1996, FirstGroup acquired the Scottish bus operator SB Holdings Limited.
In January 2002, the Secretary of State had accepted behavioural undertakings from FirstGroup. The undertakings were designed to prevent FirstGroup from exploiting its market power through raising fares above the total permitted increase. As a result, the undertakings capped fares in relation to FirstGroup's operations in Edinburgh and Glasgow.
Subsequently, FirstGroup requested for the OFT's consent to change a fare zone boundary. The OFT allowed the change and the fare increase. In their decision, the OFT concluded that the proposed zone change, which constitutes an indirect price increase, does not represent an exercise of market power by FirstGroup and in the absence of the undertakings, the most likely alternatives for FirstGroup would be to seek to increase bus revenue or reduce its costs (by reducing services). Therefore, the OFT concluded that it was reasonable to allow the change, and the resultant fare increase, given all the evidence provided and taking into account the original purpose of the undertakings.
24 December 2009