CMA publishes issues statement for FirstGroup review

OREANDA-NEWS. November 26, 2015. The Competition and Markets Authority (CMA) announced in October 2015 that it would carry out a review of the undertakings in relation to the completed acquisition by FirstGroup plc (FirstGroup) of SB Holdings Ltd.

The undertakings, affecting FirstGroup’s bus business in central and southern Scotland, were first given by FirstGroup in 2002 following its acquisition in 1996 of SB Holdings. They were subsequently amended following the Competition Commission’s (CC) review of the undertakings in 2008.

The undertakings limit the fares that FirstGroup can charge and require the company to operate at least 75% of the mileage that it operated in January 2002 (see notes for editors).

FirstGroup 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 competitive conditions, so that the undertakings are no longer required. The CMA will now consider the implications of this evidence for the remedies and whether the remedies should be removed, varied or retained.

The statement identifies the issues the panel members propose to focus on and invites views on any areas not covered.

The statement and administrative timetable are available on the case page along with all other published information relating to the review.

Anyone wishing to respond to the issues statement should do so in writing, by 5pm on 11 December. Please email firstgroup.undertakings@cma.gsi.gov.uk, or write to:

Notes for editors

1. 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.
2. The members of the review group are: Phil Evans (Chairman of the group), Roger Finbow and Jayne Scott.
3. 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 CC decided not to follow the OFT’s recommendation but instead varied the undertakings by revising the fare cap and rebasing the mileage floor.
4. The fares cap applies to FirstGroup operations in the First Edinburgh and First Glasgow areas. The First Edinburgh area comprises the unitary authorities of Stirling, Clackmannanshire, Falkirk, West Lothian, Midlothian, East Lothian and the Scottish Borders. The First Glasgow area comprises the unitary authorities of the City of Glasgow, North Lanarkshire, South Lanarkshire, East Dunbartonshire, West Dunbartonshire and East Renfrewshire. The mileage limit applies to FirstGroup operations in the First Edinburgh area. The price cap and mileage floor do not extend to Edinburgh.
5. 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.
6. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on reviews of orders and undertakings.
7. Enquiries should be directed to Simon Belgard (simon.belgard@cma.gsi.gov.uk, 020 3738 6472).