Takeover of Sussex bus firms to go ahead

29 October 2009

The Competition Commission (CC) has cleared Stagecoach’s takeover of two Sussex bus companies, despite previously claiming the acquisitions would stifle competition.

The U-turn regarding the takeover of Eastbourne Buses and Cavendish Motor Services was announced following consultation on the previous decision. The case was first referred by the Office of Fair Trading (OFT) in May.

After clearing the mergers, the CC admitted it had changed its provisional decision in the light of further analysis showing Cavendish was operating loss-making routes in 2008, and that its financial position had ‘substantially deteriorated’ following an expansion of routes.

The commission said in light of these findings it was unlikely the firm would have continued to run the routes, which meant the competition between the two firms would not have continued.

Dr Peter Davis, CC deputy chairman, said it was unlikely that any other operator would have bought Cavendish, and the firm could have been closed altogether. ‘As such, we do not consider that the merger has substantially lessened competition and so we have cleared the merger.’

A spokesman for Stagecoach welcomed the announcement, saying it was the right decision for passengers.

‘Stagecoach has brought significant new investment to bus services in the area, ensuring that local people have access to a sustainable, comprehensive, high-quality and affordable bus network,’ he said. ‘We look forward to building on the improvements and attracting more people to the benefits of greener, smarter bus travel in the future.’

The OFT announced earlier this year that it intended to send the UK bus market to the commission for investigation (Surveyor, 20 August 2009). It is thought the OFT will be announcing a final decision on this soon, now its consultation on the provisional decision has closed.

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