OFT Sends McGill’s Merger to CC

The Office of Fair Trading (OFT) has recently referred the multi-million pound merger of McGill’s Buses and Arriva Scotland West to the Competition Commission. McGill’s Buses, which operates nearly 200 buses on routes in East Renfrewshire and Renfrewshire, arranged the deal. It took over the routes served by Arriva Scotland West on March 26.

The companies previously operated competing services in East Renfrewshire and Renfrewshire, and the OFT says it’s worried that the merger will cause a loss of competition among local bus services. This is because McGill’s and Arriva operate so strongly in the area compared to rivals. The commission is due to report on the matter by October 2.

In a statement, the OFT said that the merger between McGill’s Buses and Arriva Scotland West reduces competition on several sections of routes, where the companies used to compete. This creates a monopoly on some sections of journeys. They are also concerned that the merger takes away the potential competitive constraint that the companies practiced with each other. Even though there are other bus firms operating in the region on some level, they are worried the main constraint in terms of restricting expansion and entry by rival operations was from the other.

OFT senior director of cartels and criminal enforcement Ali Nikpay, who is also making the decisions in the case, says the market investigation into the bus industry by the Competition Commission showed how important competition is at a local level between bus operators. The OFT will look carefully at mergers between competitors that can potentially cause rises in prices or less frequent journeys for passengers. They believe it’s appropriate the Competition Commission investigates the merger in detail to make sure the interests of passengers in the Renfrewshire region are protected.

McGill’s says their lawyers notified them this week that the OFT referred the merger of assets to the Competition Commission for investigation. The full details of the decision hadn’t been disclosed yet. They will consider the implications of the decision on the Renfrewshire operations in the coming days and will issue more statements on the matter later.

McGill’s Buses managing director Ralph Roberts says they are disappointed to hear about the decision the OFT has made. Despite offering several guarantees to the regulator in relation to routes, frequencies and fares – along with the introduction of a mutli-operator ticket – they are now faced with six more months of uncertainty. This decision puts into extreme relief the fact that there’s a government agency with a direct impact on local business, without needing knowledge from the local market. Their company has saved bus routes and jobs in Renfrewshire after the decision by Arriva to withdraw from Scotland. If they hadn’t moved on this, there would be similar scenes to those in Musselburgh and Dalkeith – where more than 200 people have lost their jobs.

MPs Douglas Alexander and Jim Sheridan reported McGill’s Buses to the OFT, raising concerns that the company has a monopoly in the area now and claiming to have received an overwhelming amount of complaints about overcrowded buses and late services since the merger. Alexander says he welcomes the OFT’s announcement, weeks after writing to the regulator with a request for this action due to real concerns about the potential impact of the merger on local bus services. These services are a crucial lifeline for many locals, and it’s crucial a monopoly is avoided to ensure fares aren’t increased and routes scrapped. They have seen a negative impact already, he added.

Sheridan said that he has received many letters, emails and calls from people very worried that the takeover will leave just one bus operator in Renfrewshire and that prices will rise and vital routes jeopardised due to a lack of competition. A monopoly in the area isn’t healthy for the travelling public – especially where bus services are the only option for many.