DTI reverses bus sale order

THE SALE of a bus company owned by FirstGroup, the transport company, was blocked yesterday by the Department of Trade and Industry after ministers watered down recommendations made by competition authorities.

Last year the company had been ordered to sell a division of its Scottish bus operation after a ruling by the Monopolies and Mergers Commission said FirstGroup's pounds 96m acquisition of Glasgow-based SB Holdings could act against the public interest.

The bus operations earmarked for sale, including at least one of SBH's four central Glasgow bus depots, are thought to have a combined annual turnover of pounds 40m, compared to estimated group sales of pounds pounds 750m.

However Margaret Beckett's final act as President of the Board of Trade was to reverse this decision. She argued that soon after FirstGroup bought the bus company, Stagecoach had entered the Glasgow market.

Stagecoach bought a fleet of 50 new buses on to the city streets and began operating on five important radial routes into the city just weeks after the MMC's report.

"While the Director General of the Office of Fair Trading has advised that Stagecoach's entry into the Glasgow bus market does not change his view that divestment is necessary, I do not agree," said Mrs Beckett in a statement.

Instead the FirstGroup will have be follow a ticket pricing strategy to ensure that it cannot undercut and drive out rivals. The package of undertakings will also see minimum service levels, restrictions on fare and frequency changes.

Moir Lockhead, chief executive of FirstGroup, welcomed the decision. "We have worked hard to show the Office of Fair Trading that the acquisition was not against the public interest. At the same time we have significantly improved the quality of bus services in Glasgow."