Stagecoach may appeal 'perverse' sale order

Published on Wednesday 11 November 2009 20:53

STAGECOACH is considering seeking a judicial review of an order from the Competition Commission to sell a bus businesses it acquired in January, The Scotsman understands.

Claiming the commission was contradicting competition law, Stagecoach said the order to offload Preston Bus was "perverse and irrational".

The commission said in September Perth-based Stagecoach's acquisition of Preston Bus would "reduce competition and potentially harm the interests of passengers" in the area.

In its final report on the investigation, released yesterday, it said a forced sale to a rival was "the most effective way to restore competition and safeguard passenger interests". Stagecoach, which operates bus services across the UK and North America, bought Preston after being approached by the loss-making company.

It promised to simplify fares and that "many passengers" would get cheaper travel. The deal added 120 buses and 300 employees to Stagecoach, which already operated 160 buses in the Preston, Chorley and Fylde areas.

However, the sale sparked the commission's inquiry, which is separately investigating local bus competition across the UK.

Peter Davis, who led the inquiry, said the commission believed the merger would lead to higher fares and poorer service levels."Without the merger, the competition each company would have faced would have ensured that it maintained or improved its services to attract passengers," Davis said.

The commission ordered a sale to a "company capable of competing with it". Stagecoach said the decision was a "contradiction of competition law and common sense".

A spokesman said: "The commission's decision is to restore a failed monopoly provider of local bus services and reverse the results of legitimate competition, which it is supposed to uphold."

He said the decision could become a "dangerous precedent for all sectors of the economy".

Stagecoach said it would consider the decision in detail before deciding on its next course of action. It is understood to be appealing the decision to the Competition Appeals Tribunal.

In the lead up to the acquisition, Stagecoach had been adding new services to Preston, including more links to other parts of Lancashire, and invested 4 million in the area in 2007 alone.

The commission said the period leading up to the acquisition saw "abnormal competition" and, as a result, decided to assess competition levels prior to June 2007.

It is this element of the decision that Stagecoach is thought likely to challenge, claiming the implication might be that its decision to improve services in the area counted against it.