Following a referral from the OFT in May 2009, the CC has published its initial findings following the acquisition of Preston Bus Limited by Stagecoach Group Plc.
The CC has concluded that the merger is likely to lead to a substantial lessening of competition in the market for the provision of commercial bus services. In particular, the CC noted that the loss of competition resulting from the merger would decrease potential new entrants in the market and would result in a worsening of price and non-price factors in relation to which the parties previously constrained each other. They considered, therefore, that the merger would lead to higher prices than would otherwise be the case and a decline in service levels.
In order to address the lessening of competition, the CC is considering suitable remedies which include the possible sale of Preston Bus in whole or in part and a series of behavioural remedies such as restricting Stagecoach’s responses to new entries in the market and controlling aspects of Stagecoach’s behaviour.
The CC invited comments on the possible remedies and comments from third parties throughout September and intends to publish its final report by 12 November 2009.