OFT clearance of Thameslink Great Northern bidders

Full text (PDF, 12 pages) of the Office of Fair Trading's reasons for not referring the potential acquisition of the Thameslink/Great Northern franchise by Stagecoach to the Competition Commission. The OFT found that there were a number of overlaps between the rail franchise and Stagecoach's bus and coach services, including megabus.com.

However, the OFT's "profitability analysis" found that after a merger Stagecoach would have little or no incremental "incentive" to "increase bus fares and/or reduce frequencies in order to switch bus passengers to rail". The OFT's assessment was that "no significant merger-specific revenues increase would be generated or that profits from [a strategy of raising fares] would be low". This rejected the OFT's "theory of harm" and was apparently sufficient (together with the absence of any vocal third-party concerns) to convince the OFT that no significant lessening of competition would result from the merger.

The decision does not report any specific analysis of the loss of competitive constraints that could result from the merger, and does not discuss whether any such loss of competitive constraints might affect management incentives and behaviour, the likelihood of future efficiency improvements, or advertising, marketing, service development or innovation.

The OFT has also published its decisions clearing some of the other potential bidders (all PDF): DSB/EWS decision, 8 pages; Firstgroup decision, 7 pages; MTR Laing decision, 6 pages. The exact reasons for clearing vary between the decisions but any competition issues seemed to be even less significant in the OFT's view for these other bidders.

Update, September 2005: National Express bid referred.

For further information or advice please contact Franck Latrémolière.

Filed under Merger control, OFT, Public transport.

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