Stagecoach North West is to appear before the traffic commissioner over claims of a bus war in Preston.
Stagecoach representatives will appear at the inquiry
The company is currently competing for passengers along the same routes into the city with rival firm Preston Bus.
The issue was raised in the House of Commons by Preston Labour MP Mark Hendrick, who accused Stagecoach of using "dirty tactics".
North West Traffic Commissioner Beverley Bell has now called the firm to a public inquiry.
Ms Bell has the powers to suspend or revoke a company's licence to operate.
Representatives from Stagecoach will be questioned and the inquiry is due to hear evidence regarding the company's behaviour.
Preston Bus employees may also be called to give evidence.