Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


APPENDIX A

BUS CARTEL ENDED IN NORTH WEST ENGLAND

  Price fixing and market sharing agreements between 10 bus operators in the North West of England were ended by the Restrictive Practices Court today.

  The agreements effectively kept fares higher than they might have been in a competitive market. All of these agreements were uncovered after a prolonged investigation by OFT's Cartels Task Force.

  Mr Justice Buckley, presiding, said that the Court viewed very seriously the blatantly anti-competitive price fixing and market sharing arrangements entered into by these bus operators in the North West of England. He said that they were a matter of considerable public concern.

  OFT Legal Director, Miss Pat Edwards, said: "These were especially damaging examples of cartel agreements which had as their object the denial to the people of Liverpool and surrounding areas, of the possibility of cheaper fares through increased competition. The Court has again confirmed that such agreements are against the public interest. The new competition legislation which we expect to be enacted this month will give the OFT far stronger powers for action against cartels and will provide a strong deterrent against this damaging activity."

  In an undefended hearing, the Court accepted undertakings from MTL (Liverpool), North Western Road Car (Liverpool), CMT (Liverpool), South Lancashire Transport (St Helens), the owner of David Tanner Travel (St Helens), PMT (Stoke on Trent) and First Manchester (formerly Greater Manchester Buses North) not to give effect to any of the agreements to which they were parties, or to enter into similar agreements in future, and not to enforce any other registerable agreements that have not been properly furnished to the OFT. In addition, the Court made orders against the owner of Nip-on Transport Service (St Helens), Halton Borough Transport (Runcorn) and Greater Manchester Buses South with the same effect.

  The Court heard that after a period of intensive competition between MTL with both First Manchester (then known as Greater Manchester Buses North) and Greater Manchester Buses South, anti-competitive agreements were concluded in 1995 whereby MTL withdrew all of its services from Manchester in return for the two Manchester based companies each withdrawing all of their services from Liverpool. MTL then took many of the vehicles and drivers that they had withdrawn from Manchester, and deployed them in the St Helens area, where they put pressure on the local operators South Lancashire Transport, Nip-on Transport Service and David Tanner Travel to enter into a series of market-sharing agreements.

  Competition in the bus market in Liverpool was further reduced in 1996 when MTL, North Western Road Car, CMT, South Lancashire Transport and Halton Borough Transport conspired to fix the prices of their fares on one and two mile journeys in and around Liverpool and in addition fixed the prices of children's fares on weekend and off-peak services: MTL and PMT additionally fixed the prices of children's weekend and off-peak fares on the Wirral.

Notes

  1. Under the Restrictive Trade Practices Act 1976, details of agreements between two or more persons carrying on business in the UK in the supply of goods or services must be furnished to the Director General of Fair Trading for registration if two or more parties to the agreement accept certain kinds of restriction on their commercial freedom. To be subject to registration, an agreement need not be contractually binding; a "gentleman's agreement" may be caught. Failure to furnish an agreement within the time-limits specified by the Act renders the restrictions in the agreement void and legally unenforceable.

  2. Section 1 of the Act, subject to certain exceptions, requires the Director General to refer all registered agreements to the Restrictive Practices Court for a ruling as to whether the restrictions in the agreement are against the public interest. The Court may order the parties not to give effect to, or enforce, or try to enforce, the restrictions in the agreement, and not to make any other similar agreement.

  3. If the details of a registrable agreement are not furnished within the time required by the Act, section 35 empowers the Director General to apply to the Court for an order to be made restraining any party to an agreement, who carries on business within the United Kingdom, from giving effect to, or enforcing, or trying to enforce, the restrictions in the agreement, or any restrictions in any other registrable agreement, details of which have not been notified in time. Failure to furnish particulars of an agreement is not a criminal offence, but anyone adversely affected by its operation has grounds for action in the civil courts.

  4. Any breach of an Order made by the Court, or of an undertaking which it has accepted in lieu of an Order, may constitute contempt of court.

  5. The full names of the companies and firms involved in these proceedings are Merseyside Transport Ltd, North Western Road Car Company Ltd, South Lancashire Transport Company Ltd, C & M Travel Ltd, Nip-on Transport Service, David Tanner Travel, Halton Borough Transport Ltd, PMT Ltd, First Manchester Ltd and Greater Manchester Buses South Ltd.

  6. The OFT's cartels initiative was launched on 2 February 1995. As part of the campaign to identify secret price-fixing and market-sharing cartels, a Cartels Task Force was set up. It can be contacted on a 24-hour telephone/fax hot-line number: 0171-211-8888.


 
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Prepared 28 April 1999