OFT reprimands bus companies over route cartel

The Office of Fair Trading yesterday reprimanded Arriva and FirstGroup after ruling their bus businesses had operated a cartel in Leeds and Wakefield. The watchdog launched its investigation in July 2000 after receiving an anonymous letter alleging the two companies had been involved in route-swapping in Leeds.

It found that staff of both companies had met in a hotel room and agreed Arriva would withdraw five buses from two local routes. This left FirstGroup with no competition on either route, and it in turn agreed to withdraw from two routes that Arriva took on.

Arriva and FirstGroup, which also run national train services, were initially ordered to pay £1m. The OFT said it has decided to cut the penalties for both companies in return for their help with the inquiry. FirstGroup, which was originally fined £529,852, escaped without paying any penalty as it was the first to volunteer information.

However, Arriva won only a 36 per cent discount for its help, reducing its fine to £203,632. It attacked the penalty for being "at a disproportionate level". The company said it would have to study the detail of the ruling before making further comment.

The OFT said that both companies had infringed an anti-competitive agreement which came into force in 2000. John Vickers, the director-general of Fair Trading, said: "Running a cartel is a serious breach of the Competition Act and undermines competition."

Mr Vickers said: "Both companies co-operated in this investigation and benefited from our leniency programme ... This shows that the full benefits of leniency are only available to the first one through the door."

FirstGroup said that it had disciplined two of its senior staff in Yorkshire. It added that this was an "isolated incident", concerning just two of its 156 bus routes in Leeds. A FirstGroup spokesman said: "The public faced no adverse effect on prices and still get buses running on the majority of the corridor at the rate of one every two to three minutes."