The review follows a consultation by the Competition and Markets Authority (CMA) last month in response to a request made by FirstGroup.
As a result of the current undertakings, which were first given by FirstGroup plc following its acquisition in 2002 of SB Holdings and have been subsequently amended following the Competition Commission’s review in 2008, a basket of FirstGroup’s fares in Glasgow and Scotland East (see below) is capped and in Scotland East FirstGroup is required to operate at least 75% of the mileage that it operated in January 2002. It is also required not to increase commercial competition against tendered services where it was unsuccessful in bidding for the tender and to operate even spacing of new commercial services between those of competitors.
FirstGroup has provided the CMA with evidence suggesting that there may have been changes in the competitive conditions in these markets and in the costs and demand conditions affecting the operation of the remedies. The CMA will now consider the implications of this evidence for the remedies and whether the remedies should be removed, varied or kept as they are.
The CMA has appointed a group of 3 independent panel members to act as decision-makers.
Further details, including the CMA’s decision statement can be found on the case page.
In addition to considering requests by companies to review undertakings, the CMA also proactively keeps existing undertakings under review so that those that are no longer necessary are removed. The Department for Business, Innovation and Skills (BIS) yesterday announced that it had accepted the CMA’s advice to remove 7 sets of undertakings given under the Fair Trading Act 1973.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
- The undertakings were originally given in 2002 to the then Secretary of State for Trade and Industry under section 88 of the Fair Trading Act 1973. This followed a review by the Monopolies and Mergers Commission of the 1996 acquisition of SB Holdings Limited, a Scottish bus operator. In 2006 the Office of Fair Trading (OFT) recommended that FirstGroup should be released from the undertakings. The Competition Commission (CC) decided not to follow the OFT’s recommendation but instead varied the undertakings by revising the fare cap and rebasing the mileage floor.
- Scotland East predominantly consists of the unitary authorities of Stirling, Clackmannanshire, Falkirk, West Lothian, Midlothian, East Lothian and the Scottish Borders. The price cap and mileage floor do not extend to Edinburgh.
- The CMA has the ability to supersede, vary or release certain undertakings accepted under the Fair Trading Act 1973; this includes the FirstGroup undertakings. This power is exercisable in the same circumstances, and on the same terms and conditions as applied to the Secretary of State under the Fair Trading Act 1973; namely that by reason of any change of circumstances the undertakings are no longer appropriate and need to be varied, superseded or released.
- For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn.
- Enquiries should be directed to Simon Belgard (firstname.lastname@example.org, 020 3738 6472).