Bus operators angry at OFT's 'pointless' call for inquiry into services

BUS companies have criticised the Office of Fair Trading's decision to refer local service operators to the Competition Commission as "pointless" and a waste of taxpayers' money.

The OFT yesterday said its study into the local bus market uncovered evidence of "limited competition" between companies. The watchdog found that this is resulting in "higher prices and lower quality" for passengers and "poor value for money for taxpayers".

At least 1.2 billion in public money goes towards supporting local bus services each year.

All local services in the UK, except those in London and Northern Ireland, will now be subjected to a more detailed public investigation by the Competition Commission. It has greater powers than the OFT and can impose changes.

Its investigation will cover both commercial operators, such as Scottish transport companies First Group and Stagecoach, and services run by local authorities, including Lothian Buses, a publicly-owned company with Edinburgh City Council as its major shareholder. First is the largest operator in the UK, with a 20 per cent market share, while Stagecoach has about 15 per cent.

OFT senior director Heather Clayton said: "One of the concerns is that we think the commission should take a look at is the tendency for local areas to become dominated by a single operator."

The OFT said its study had found that most local bus services were being operated by a small number of large companies which tended to steer clear of each others' territories. It also pointed to complaints alleging "predatory behaviour" by established operators to exclude new entrants.

A Stagecoach spokesman said: "This is a huge waste of taxpayers' money, a pointless academic exercise for the competition authorities and an unnecessary distraction for the bus industry at a time when we should be free to get on with trying to improve bus services for passengers."

He described the OFT as "blind to the fact that bus services face constant competition from the car".

First Group also said the local bus market was "very competitive". A spokesman said: "We are concerned about the timing of the referral and believe it could become an unnecessary and costly distraction from the objective of improving traffic congestion in our towns and cities."

Howard Wheeldon, senior strategist at BGC Partners, said: "The services operated by bus operators today is just as good as the best that has ever operated over the past 50-odd years."

The commission yesterday called for evidence from all interested parties. It will report the findings of its investigation by 6 January, 2012.

Stagecoach's share price yesterday closed at 178.10p, down 0.5 per cent. First Group closed down 0.44 per cent at 409.30p