Thursday, August 20, 2009
WOW! no surprises here then!
The local bus sector is to be investigated over concerns that lack of competition is leading to higher fares for passengers, the Office of Fair Trading (OFT) announced today. The OFT said it proposed to refer the £3.6 billion industry to the Competition Commission after finding evidence that the sector was "not working as well as it should".
The OFT also said there had been complaints alleging "predatory behaviour" by existing bus operators to see off competition from new entrants. In a quarter of all tenders for supported service contracts, there was just one bidder for the work, according to the OFT. It said the large national bus groups were of particular interest, as they represent around two-thirds of local bus service provision. But they do not operate in all areas of the country and there are fears of a "live and let live" attitude where national operators respect each other's territories to avoid the threat of retaliation.
...Laughing out loud! This has gone on for years and competition is only a veneer. Anybody working in the industry will tell you about the cosy relationship between operators that has always gone on. Managers meet behind the scenes and discuss the local market to arrange among themselves the most profitable way forward. Many operators exchange key line managers as they go about patting each others' backs. There are a lot of gentleman's agreements in place and they work together for their mutual benefit. Oh yes, the public face is one of fierce competition but the reality is very different indeed. One nationwide company even boasts about partnerships with competing companies who run services under one brand name! This whole industry is so sorted by the individual companies that no government can impose competition into the local bus market. No new company can succeed because the whole market is tightly fixed by the existing operators. The government is wasting it's time with a competition inquiry because of the way the local bus business will always work. There is no way around this issue because all local bus operators will find a way around the competition rules. That is a fact of business life and I think that Margaret Thatcher was well aware of this when she privatized the National Bus Company.
The local bus sector is to be investigated over concerns that lack of competition is leading to higher fares for passengers, the Office of Fair Trading (OFT) announced today. The OFT said it proposed to refer the £3.6 billion industry to the Competition Commission after finding evidence that the sector was "not working as well as it should".
The OFT also said there had been complaints alleging "predatory behaviour" by existing bus operators to see off competition from new entrants. In a quarter of all tenders for supported service contracts, there was just one bidder for the work, according to the OFT. It said the large national bus groups were of particular interest, as they represent around two-thirds of local bus service provision. But they do not operate in all areas of the country and there are fears of a "live and let live" attitude where national operators respect each other's territories to avoid the threat of retaliation.
...Laughing out loud! This has gone on for years and competition is only a veneer. Anybody working in the industry will tell you about the cosy relationship between operators that has always gone on. Managers meet behind the scenes and discuss the local market to arrange among themselves the most profitable way forward. Many operators exchange key line managers as they go about patting each others' backs. There are a lot of gentleman's agreements in place and they work together for their mutual benefit. Oh yes, the public face is one of fierce competition but the reality is very different indeed. One nationwide company even boasts about partnerships with competing companies who run services under one brand name! This whole industry is so sorted by the individual companies that no government can impose competition into the local bus market. No new company can succeed because the whole market is tightly fixed by the existing operators. The government is wasting it's time with a competition inquiry because of the way the local bus business will always work. There is no way around this issue because all local bus operators will find a way around the competition rules. That is a fact of business life and I think that Margaret Thatcher was well aware of this when she privatized the National Bus Company.
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