Cardiff Bus ‘guilty’ of predatory move

24 May 2007

The council-owned Cardiff Bus Company engaged in predatory behaviour in order to eliminate a competitor, the Office for Fair Trading has provisionally found.
The OFT has objected to Cardiff Bus Company’s behaviour between April 2004 and February 2005, for deliberately making a loss after another bus company, 2Travel plc, entered the market. Cardiff Bus is accused of providing a new, no-frills bus service, which operated below cost, and was withdrawn once 2Travel left the market. However, the company denies the accusations.
'Predatory behaviour' is defined as a dominant company sustaining losses in the short run, with the knowledge it will be able to recoup them once the competition is forced to exit, and is in breach of the Competition Act 1998. The OFT has now given Cardiff Bus the opportunity to make written and oral representations, which the OFT will take into account before making a final decision on whether the law has been infringed.
Robin Finer, OFT assistant director, said: ‘Dominant companies have every right to compete vigorously, but they have a special responsibility not to distort competition. ‘Although consumers might see a short-term fall in prices, ultimately, they will lose out if a dominant company can exercise its market power without constraint or regard to normal competitive pressures.’ A Cardiff Bus spokesperson said: ‘Cardiff Bus confirms that it has received a statement of objection from the Office of Fair Trading. ‘Cardiff Bus will be vigorously defending this allegation as it does not believe it has infringed competition law.’

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Cardiff Bus ‘guilty’ of predatory move

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