The findings were accepted by Neil Hamilton, corporate affairs minister, who has asked the Director-General of Fair Trading to seek a set of onerous undertakings from Stagecoach.
The company said it was taking legal advice before meeting the director-general, Sir Bryan Carsberg. It pointed out that the business involved - Lancaster City Transport - was small.
Barry Hinkley, chairman of Stagecoach's North-west division, said: 'Last month the DTI cleared our July merger with East Kent Travel, which has a fleet of 247 buses and annual turnover of pounds 16.5m.
'LCT, by comparison, which was bought in August, has only 12 vehicles and less than pounds 2m turnover.
The MMC said the merger was likely to have adverse effects on competition which might lead to higher fares and lower levels of service.
The decision was the second MMC investigation out of 18 to go against Stagecoach. A spokesman for the company pointed out that there had been more than 400 investigations into bus company mergers in three years.
Derek Scott, finance director, said the MMC accepted Stagecoach had a very good record in improving services and maintaining fares.Reuse content