The Office of Fair Trading (OFT) has referred local bus services to the Competition Commission for investigation. According to the OFT they had found evidence that limited competition was pushing up prices for bus users and also producing lower quality of service.

The OFT said that it was concerned about situations where local services were being dominated by a small number of bus operators. Heather Clayton, senior director at the OFT, said: “This is certainly not about a return to ‘bus wars’ or unmanaged ‘head to head’ competition on every route, but we do think large bus operators should face a healthy level of competitive constraints.”

The OFT also expressed concern that £1.2bn was being paid out each year from the public purse and yet 25% of all tenders put out by local authorities to provide new bus services only receive a single bid. The OFT has also received complaints about the “predatory behaviour” of established firms, in trying to prevent the entry of new firms into the market. There was also concern about “overbussing” whereby major companies put too many busses on the more lucrative routes to ensure that passengers were more likely to get on one of their busses rather than those of a smaller competitor.

According to the OFT prices are 9% higher when only one of the major national bus companies is operating in an area compared to areas where two or more of the larger companies are in competition.