Deregulation fails to bring competition to bus market

A lack of competition in the UK's local bus market means poorer services and higher fares for passengers, according to the Competition Commission (CC). "Head-to-head competition is uncommon," the commission said, as it announced new rules to open up markets. Bus firms will be banned from "over-bussing" and other short-term measures designed to keep out new rivals. They will also have to share bus stations with competitors and accept "multi-operator ticketing schemes". "The reality is that in too many areas of the country, competition has stagnated and the incumbent providers know that they face little in the way of serious challenge," said Jeremy Peat, chairman of the CC's local bus market investigation group. "As such, the incentive to increase services, innovate and even lower fares is absent." The CC's report found that in one area, the North-East of England, it had seen "direct evidence" of bus firms avoiding "competition with each other in order to protect their own territories". UK bus services were first deregulated 25 years ago with the exception of London and Northern Ireland. Keeping rivals out However, deregulation had failed to deliver the "sustained competition" that allowed companies to take on existing providers of bus services, the CC found. It blamed "operator behaviour" for keeping rivals out, with some companies using short-term measures such as suddenly increasing the frequency of their bus services until a rival had left the market. There are 1,245 bus companies operating in England, Scotland and Wales, but just five of them: Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach, carry 70% of all passengers. The commission said the Office of Fair Trading should exercise "its discretion not to refer small mergers" of bus operators to the CC. Local Transport Authorities, meanwhile, are being asked to consider "partnerships" with new operators to increase competition in their local areas.