Guideline on ticketing scheme block exemption published by OFT

PN 52/02     27 August 2002

Clarity about competition law is the aim of a new guideline for public transport operators published today by the OFT.

The guideline sets out clearly what local transport operators need to do to ensure that their ticketing schemes satisfy the conditions necessary to benefit from a block exemption under the Competition Act 1998.

The Competition Act 1998 prohibits anti-competitive agreements – such as agreements between transport operators to fix fares or reduce services – but allows agreements to be exempted if they benefit consumers and meet other conditions. The block exemption provides an automatic exemption for certain types of public transport ticketing schemes.

The block exemption covers agreements between local transport operators on multi-operator travelcards, through tickets, multi-operator individual tickets and add-on tickets. It includes:

• travelcards providing for travel on a number of different operators' services within a geographical area, including bus zonal tickets and '+Bus' tickets under the Journey Solutions initiative;
• through ticketing schemes under which passengers can buy a ticket for one journey on buses or trains of more than one operator;
• tickets which allow outward travel for a particular journey on the service of one operator and return travel on the service of another.

Schemes that fall outside of the block exemption may still be eligible for an individual exemption – and could fall outside of the Act completely if they do not have an appreciable impact on competition.

John Vickers, Director General of Fair Trading, said:

'Travelcards and through tickets are beneficial to consumers. They are convenient for passengers, promote the use of public transport and reduce congestion. Competition law is pro-consumer and no obstacle to such arrangements that properly benefit passengers. This new guideline will help the industry realise these benefits for the travelling public.'

The OFT published the draft guideline for consultation in March 2001 and has consulted extensively with the Confederation of Passenger Transport, local authority bodies, the Department of Transport and many senior figures in the bus industry on the contents and wording of the final guideline.

The OFT will review the block exemption early next year to make sure that it is meeting its objectives.

NOTES

1. The block exemption covers ticketing schemes for local travel on buses, trains, trams and inland ferries: that is, multi-operator travelcards, multi-operator individual tickets, through tickets and add-ons.

2. The Journey Solutions initiative allows passengers with single or return train tickets starting or finishing at stations where a +Bus scheme exists to buy an add-on travelcard for use on buses within a specified geographical area.

3. To qualify for an exemption, agreements must:

• help improve production or distribution or promote technical or economic progress;
• provide for a fair share of the resulting benefits to be given to consumers;
• contain only restrictions which are indispensable;
• not go so far as to make possible the elimination of competition.

4. The Competition Act 1998 came into force on 1 March 2000. The block exemption came into force on 1 March 2001 but had retrospective effect back to 1 March 2000. The Act provided that agreements made before that date generally benefited from a one year transitional period during which the Chapter I prohibition – which prohibits anti-competitive agreements – did not apply. Certain ticketing agreements made after 1 March 2000 but before March 2001 – and therefore not covered by the transitional period – can also benefit from the block exemption as it has a retrospective effect.

5. Download the guideline Public transport ticketing schemes block exemption in pdf format (399 kb). Hard copies of the guideline will be available from the OFT mailing house from 30 August 2002. You can also download a document giving answers to a number of  frequently asked questions relating to competition law and the bus industry, in pdf format (49 kb).

6. In this press release the functions of the Director General of Fair Trading (DGFT) under the Regulations are for simplicity described as the functions of 'the OFT'. The Enterprise Bill proposes to replace the office of the DGFT with the OFT, to which would be transferred the DGFT's functions.