MPs voice support for 'Ofbus'

An "Ofbus"-style regulator should be appointed to the bus industry to prevent unfair competition and companies' being driven out of business by predatory practices, an all-party Commons committee recommended yesterday.

The Transport Select Committee, which has published a report on the deregulation of the bus industry, says there have been more complaints to the Office of Fair Trading about the bus industry than about all other industries put together, a total of 541 between 1987 and the end of 1994.

Yet the OFT is seen as too slow and cumbersome to deal with complaints, since often, by the time it has produced a report, a company has been driven out of business. The committee warned that 20 companies remained within municipal control and these were vulnerable to predatory attacks unless there were new procedures to protect them when they were put up for sale.

The report said some companies "had received threats, direct or implied, to keep out of an area or face being run off the road in a predatory retaliation". More common forms of predatory behaviour were to "swamp an area with buses in order to reduce an incumbent's revenue and to cut fares, or even to charge no fares at all".

The committee highlighted the case of Darlington, where Stagecoach, Britain's biggest bus company, ran a free bus service in 1994 in order to drive the local municipal bus company out of business. Stagecoach also poached drivers by offering them a signing-on fee and although the Monopolies and Mergers Commission later called Stagecoach's activities"predatory, deplorable and against the public interest", by then, the municipal bus company had gone bankrupt.

Buses were deregulated outside London by the Transport Act 1985. The committee found that: "The effects of bus deregulation have been very uneven throughout the country."

Since deregulation, three or four big bus groups have grown through acquiring smaller companies around Britain. The committee heard evidence that there were suspicions that these big groups were deliberately avoiding competing with each other. The OFT said there was an "apparent reluctance of the major operators to engage in direct competition with other larger companies by invading 'their' territories." However, the large companies had been very aggressive in taking over smaller firms.

The industry body, the CPT, opposed the creation of a regulator, which would "simply add an unnecessary and wasteful layer of bureaucracy".