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Changes recommended to ensure Bus Services Bill preserves competition

The new franchised transport authorities set to be created under the Bus Services Bill should not threaten competition between different services, the Competition and Markets Authority (CMA) has said.

In a blog post, Douglas Cooper, a project and inquiry director at the CMA, said: “The CMA welcomes the increased flexibility offered by the Bill. Local bus markets are complex and varied. Deregulated outcomes may not be optimal, but a ‘one-size-fits-all’ solution simply isn’t realistic.

“We recognise that the introduction of franchising may be appropriate in specific circumstances. But we continue to believe that on-road competition should only be abandoned in favour of competition for the market where it’s clear that this is the only way to secure better outcomes for the travelling public.”

He said that under new powers granted to the CMA to make recommendations on legislation, it has written to Andrew Jones, the minister for buses, asking him to change the Bill so that it requires local transport authorities to follow certain steps before taking action that might put bus competition at risk.

Cooper said local authorities should first be required to consider how best to make the deregulated market work so the benefits of competition for passengers can be retained, then carefully assess the impact of their proposed action, including on local competition, demonstrate that any distortion to competition can be justified, and conduct a consultation.

Jon Lamonte, chair of the Urban Transport Group, criticised the CMA’s proposals, saying: “We do not share the CMA's view that a new set of hurdles and criteria needs to be introduced before cities can be allowed to co-ordinate bus services through franchising. The CMA view appears to rest on the assumption that on-street competition is inherently preferable to competition for a contract to provide a network of services.

“We believe that there can be wider benefits to bus passengers, and for our cities' wider aspirations on transport, of having a straight-forward method of replacing on-street competition with for-the-market franchising competition. Not least insofar as franchising allows the development of an integrated bus service with simple and smart ticketing. The same formula that has proved so successful in London.”

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