Inquiry into 'bus war' buy-out

The two companies had initially agreed to a code of practice

The buy-out of a Lancashire bus firm by Stagecoach is being investigated by the Competition Commission (CC).

The Scottish transport firm, based in Perth, was involved in a "bus war" for passengers with Preston Bus Limited before purchasing it earlier this year.

The CC is considering action after concluding that the move "will reduce competition and potentially harm the interests of passengers".

Stagecoach said the merger had secured jobs and provides a better service.

The two firms were involved in competition for fares in the city from 2007.

Service level concern

Late that year Stagecoach was called before the traffic commissioner over the "bus war" and a code of practice was agreed between the two firms.

Dr Peter Davis, CC deputy chairman and chairman of the inquiry group, said: "Our provisional view is that the loss of competition caused by this merger could have an adverse impact on passengers in Preston by leading to a worsening in fares and other factors such as service levels.

"Without the merger, we believe the potential or actual competition each company would have faced from the other would have ensured that they maintained or improved their services in order to attract passengers."

Sale possible

A spokesman for Stagecoach, one of the UK's largest bus and coach firms, said it did not agree with the CC provisional findings.

"Under our ownership, we have given local people access to a more integrated, sustainable, comprehensive, high-quality and affordable bus network," he said.

"We saved the jobs of Preston Bus employees from an uncertain future and agreed to secure their pensions when no one else would make that commitment.

"Passengers have responded very positively to our investment in local services and more people have been attracted to bus travel."

The CC is inviting responses before publishing its final report on the merger in November.

Possible remedies for the loss of competition are measures to ensure new operators can work some routes or selling all or part of the business.