FirstBus's attempt to become Britain's biggest bus company was put on hold yesterday after its bid for SB Holdings, the parent company of Strathclyde Buses, was referred to the Monopolies and Mergers Commission.
John Taylor, the consumer affairs minister, said yesterday: "The acquisition raises competition concerns in the operation of the bus market in central Scotland which merit investigation by the MMC."
FirstBus, formed by the merger of Badgerline and GRT in 1995, launched its bid for SB Holdings in May, offering pounds 110m. The takeover of SB would put it ahead of Cowie and Stagecoach.
SB Holdings was bought by its employees for pounds 21m in 1993 when Strathclyde Buses was privatised, and the 3,500 workers were expected to enjoy a share- out of around pounds 35,000 each for the 6,000 shares they would receive if the deal was allowed to go ahead.
There was speculation at the time of the bid in May that a reference to the MMC was likely because the company already owned Grampian, Midland Bluebird and Lowland in Scotland.
The local Strathclyde Passenger Transport Authority had expressed concerns over the takeover, particularly the potential it gave for FirstBus to have "excessive dominance" in the Greater Glasgow area.
However, Mr Taylor stressed yesterday that he was only following the rules and "the decision to make a reference does not in any way prejudge the question of whether or not the merger would be against the public interest".
The MMC must report by 23 December.
Stagecoach has already fallen foul of the regulatory authorities over SB, having been forced to sell a 21.7 per cent holding in the company at the end of 1994.
FirstBus is still in an acquisitive mood and last month announced that it intended to bid for nearly all the remaining 12 rail franchises.
The group already jointly controls Great Western together with the management buyout team and is particularly interested in the ScotRail franchise but this is also likely to cause problems with the Office of Fair Trading.
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