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Preston Bus takeover attacked

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Stagecoach’s acquisition of Preston Bus in January “will reduce competition and potentially harm the interests of passengers,” according to the Office of Fair Trading. The OFT is now considering what action to take. Options being considered include a requirement to sell all or part of Stagecoach’s Preston businesses, measures to encourage new entry by other operators, as well as controls on fares and requirements to maintain service levels.

Competition Commission deputy chairman Peter Davis notes: “Our provisional view is that the loss of competition caused by this merger could have an adverse impact on passengers in Preston by leading to a worsening in fares and other factors such as service levels.”

Stagecoach communications director Steven Stewart responds: “We do not agree with the Competition Commission’s provisional findings. We have a long tradition of public service within Preston and Lancashire that we have continued with our acquisition of Preston Bus.

“Under our ownership, we have given local people access to a more integrated, sustainable, comprehensive, high-quality and affordable bus network. 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.

“We hope the Commission will use the consultation period to consider these factors and reflect our significant improvements for passengers in its final decision.”

The Commission’s report notes that Stagecoach indicated it was interested in buying Preston Bus in July 2006, but when this was rejected then developed a plan to launch competing services. It says: “In our view, the main cause of Preston Bus’s failure was its limited ability to sustain losses over a prolonged period of time, although it is possible that the decisions made by its management may have brought forward the failure of the business.”

And it adds that the effect of Stagecoach’s strategy in Preston after launching competing services in June 2007 was “to make Preston Bus an unattractive acquisition target for other potential bidders and left little choice to its directors but to accept an offer from Stagecoach, 30 months after Stagecoach’s original approach”.

www.competition-commission.org.uk

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