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THE EFFECTIVENESS OF UNDERTAKINGS IN THE BUS INDUSTRY

This report, by National Economic Research Associates (NERA), in conjunction with Professors S Davies and R Clarke, examines the effectiveness of undertakings negotiated with bus companies following investigations carried out under the Competition and Fair Trading Acts by the Office of Fair Trading (OFT) and the Monopolies and Mergers Commission (MMC). The cases where undertakings were negotiated are as follows: British Bus - Maidstone & District in Mid and West Kent; FirstBus - Badgerline in Avon; Greater Manchester Buses; Mainline in South Yorkshire; National Express - North East Bus in the Trimdon area; Southern Vectis in the Isle of Wight; Stagecoach - Fife Scottish; Stagecoach - Southdown in Hastings; and Stagecoach - Southdown in Bognor Regis. The bus market in the Portsmouth area has also been studied. In this latter case, in contrast to the behavioural remedies imposed in other cases, the MMC merger inquiry led to a structural remedy; the acquirer, Stagecoach, was required to divest the company it had taken over. The case has been included because it was felt that a comparison of outcomes in Portsmouth with those in the other areas concerned might throw light on the relative effectiveness of different types of remedy. A detailed description of the undertakings applied in each area appears in the Annex to this report. Following the introductory chapter, the remainder of the report is structured as follows: chapter 2 begins by summarising the background to the 1985 Transport Act, which led to major changes in ownership, structure and regulation of the bus industry in England and Wales. It then describes the main features of the local bus markets in the ten case study areas, focusing on market structure at the time of the original OFT/MMC inquiry and its subsequent development. Chapter 3 summarises the circumstances leading to the negotiation of the undertakings, the nature of the public interest detriments to be remedied by the undertakings, and the form of the undertakings themselves. Chapter 4 assesses the effectiveness of the undertakings, and of the structural remedy applied in Portsmouth. Chapter 5 draws some lessons from the review of effectiveness and from the information collected on market structure for the future application of competition policy in the bus industry.

  • Corporate Authors:

    Office of Fair Trading

    Field House, 15-25 Breams' Buildings
    London,   England 
  • Publication Date: 1997

Language

  • English

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00757377
  • Record Type: Publication
  • Source Agency: Transport Research Laboratory
  • Files: ITRD
  • Created Date: Dec 17 1998 12:00AM