Stagecoach/Cavalier merger of "insufficient importance"

OFT grounds (32 pages, PDF) for clearing Stagecoach's acquisition of Cavalier Contracts, a Cambridgeshire and Lincolnshire bus company.

Stagecoach and Cavalier were two of the three operators expected to use Cambridgeshire County Council's Guided Busway when it comes into service in 2009. The incumbent Guided Busway operators will have contractual protections against entry by competing operators. There are also overlaps between Stagecoach and Cavalier services on some normal bus flows.

The OFT determined that the existing overlaps did not lead to a substantial lessening of competition mainly because of other actual or potential competitors on these flows.

As regard the Guided Busway, the OFT rejected Stagecoach's arguments that the services will be effectively regulated by the Council, and found a realistic prospect of a substantial lessening of competition.

But the OFT cleared the merger on the ground that the markets affected were of insufficient importance to justify a Competition Commission reference, because:

... the size of the market is well below the £10 million threshold, there is only a relatively low probability of anticompetitive effects arising from the merger, and these, if they occur, will be of limited scope for the reasons discussed above.

This is the second time this year that Stagecoach convinces the OFT that the lessening of competition arising from its transactions is unimportant, and the fourth public transport merger disposed of in this way since the change in OFT guidance. The previous such cases were:

In all these cases, as in Cambridgeshire, the relevant Government or local transport authorities had sponsored or supported the mergers. Note 2 of the OFT press notice recalls other previous cases in which the concept was considered.

For further information or advice please contact Franck Latrémolière.

Filed under Merger control, OFT, Public transport.

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