Local buses face market inquiry

The Office of Fair Trading (OFT) wants to refer the local bus industry to the Competition Commission after a five-month inquiry produced evidence that limited competition on some routes could be boosting prices.

The majority of local bus services are run by a small number of large companies, and the OFT has had 30 complaints since 2000 about "predatory" tactics, including running more services to crowd out smaller rivals, or timing buses to run either just before or just after competitors'.

John Fingleton, the chief executive of the OFT, said: "Our investigation has unearthed a range of evidence that suggests the market for local bus services is often not working as well as it should and may be resulting in higher prices for bus users."

The issue has implications for the public purse because the local bus market receives around £1.2bn in public subsidies, Mr Fingleton said.

Interested parties have until the middle of October to submit their views to the OFT. If the proposal to refer the issue to the CC goes ahead, it will be subject to a detailed investigation, during which the watchdog can compel evidence and impose remedies.

"We believe that the issues we have identified clearly justify a full investigation and we therefore propose to refer this sector to the CC," Mr Fingleton said.