Anticipated acquisition by First Glasgow (No. 2) Limited of the assets of Hutchison Coaches (Overtown) Limited

Affected market: Bus services

No. ME/2997/07

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.  

The OFT's decision on reference under section 33(1) given on 4 June 2007. Full text of decision published on 21 June 2007.

PARTIES

First Glasgow (No. 2) Limited is a subsidiary of FirstGroup plc (First), a publicly owned company listed on the London Stock Exchange. First operates public transport businesses in the UK and US.

Hutchison Coaches (Overton) Limited (Hutchison) is a small bus and coach operator based in North Lanarkshire. It is a wholly owned subsidiary of S.A.H. Limited, which has interests in property and haulage. Hutchison's turnover in the year ending 31 December 2005 was £2.5 million.
 
TRANSACTION

First will acquire the assets (i.e. buses and employees) of Hutchison by means of an asset purchase agreement, excluding the private hire coaching business of Hutchison (the Hutchison Business).

JURISDICTION

As a result of this transaction First and the Hutchison Business will cease to be distinct. The share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met in relation to the supply of bus services in the area covered by the following Strathclyde Partnership for Transport (SPT) unitary areas: North Lanarkshire, South Lanarkshire, Glasgow City, East Dunbartonshire, West Dunbartonshire, Renfrewshire and East Renfrewshire which the OFT considers to collectively form a substantial part of the United Kingdom. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

THIRD PARTY VIEWS

Of the third parties who responded to the OFT's requests for information, only one competitor raised concerns about the reduction in competition arising from the merger. All other third parties, including two other competitors, stated that there would be sufficient competition in the North Lanarkshire area following the transaction such that the merger did not create any competition concerns.

ASSESSMENT

The parties to the merger each operate tendered and commercial bus services in the North Lanarkshire area. In addition, First also operates rail services in North Lanarkshire through its operation of the ScotRail franchise.

The parties' overlap in the supply of tendered bus services in the North Lanarkshire area is small and there is evidence of competition from a number of existing operators of tendered services in the relevant areas.

The parties identified nine overlaps between Hutchison's commercial bus services and First's commercial bus and/or rail services. On each of these overlaps First will face at least one established and effective competitor post-merger. The OFT found also that competition in the North Lanarkshire area was strong, with a number of operators present that will continue to act as a competitive constraint post-merger. This was confirmed by all but one of the third parties who responded to the OFT's invitation to comment on the merger.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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