Cowie bus deal goes to MMC

Cowie, the North-east of England bus group and car dealer, saw its shares dive 7 per cent yesterday in reaction to a surprise announcement that its pounds 282m acquisition of British Bus had been referred to the Monopolies and Mergers Commission.

John Taylor, corporate and consumer affairs minister, said the acquisition, which at a stroke turned Cowie into the UK's third-largest bus operator, raised competition concerns about bus services in Surrey and Kent and south London. The group has a leading market share in the capital. On the advice of the Office of Fair Trading, Mr Taylor has referred the issue to the MMC, with a brief to report back by 6 February.

This is not the first controversy to hit British Bus, whose former chairman, Dawson Williams, has been charged with corruption offences after a Serious Fraud Office investigation. But Cowie and analysts played down the significance of the reference yesterday and, after touching 338p, the shares regained some of their losses to end 6p down at 359p.

Although Cowie said at the time of the deal that a referral was "unlikely", company spokesman Robert Blower said they remained confident the MMC would not force the reversal of the whole acquisition. "That would be totally unnecessary and is not on the cards. The OFT are not thinking that way at all."

Mr Blower believed that the problems lay with Kentish Bus and London & Country, two British Bus subsidiaries which operate services into London. With Cowie's existing operations, this would give the combined group a 26 per cent market share in the capital, 1 percentage point more than the maximum normally allowed by competition authorities.

Mr Blower said rationalisation in Kentish Bus had already reduced the share to 25.4 per cent and there remained plenty of scope to reduce further by swapping or cutting routes. In all, the business at issue related to 1 or 2 per cent of the pounds 280m turnover of British Bus.

"We maintain that our services don't operate against the public interest, that there isn't a competition issue and when you look at 25.4 per cent, it is only a marginal issue and there is plenty of scope to rationalise our London operation."

One analyst said if there had been a major problem, the Government would have referred the acquisition before it was completed in August.

However, another said the news had come as "a bit of a blow". The company had neglected its new car sales side this year and this could put a question mark over the strategy of moving into buses, she said.

PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Newly Qualified Accountants - Risk Mgmt

£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...

Citifocus Ltd: Operational Risk Analyst

£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...

h2 Recruit Ltd: Business Development - Telecommunications - £50,000 OTE

£25000 per annum + £50,000 OTE: h2 Recruit Ltd: London, Reading , Southend, Al...

Recruitment Genius: Call Centre Agent - £22,000 OTE

£18000 - £22000 per annum: Recruitment Genius: As a Call Centre Agent you will...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital