Page last updated at 10:10 GMT, Wednesday, 11 November 2009

Company must sell 'bus war' rival

Stagecoach bus (generic)
The bus deal was not in passengers' interests, it was ruled

A transport firm which bought out its rival in a "bus war" in Lancashire has been ordered to sell it by the Competition Commission (CC).

Stagecoach and Preston Bus Ltd were competing before Stagecoach bought it out earlier this year.

The CC had provisionally concluded last month that the sale reduced competition and was not in passengers' interests.

Now Stagecoach must sell Preston Bus "to a company capable of competing with it", the CC said.

Dr Peter Davis, CC deputy chairman and chairman of the inquiry group, said: "We found that this merger resulted in a substantial reduction in competition that would, in our view, have an adverse impact on passengers in Preston, leading to a worsening in fares and other factors such as service levels.

"In summary, we came to the view that it will be beneficial to restore competition to a similar level to that which existed before the abnormal, loss-making activities that immediately preceded the acquisition."

'Perverse and irrational'

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

A Stagecoach spokesman said they "fundamentally disagree" with the CC's decision.

"It is a perverse and irrational contradiction of competition law and common sense," he said.

"The commission decision will ensure a further period of instability and uncertainty, against the public interest.

"We shall consider the decision in detail before deciding on our next course of action."

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