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Press releases 2003
Advice for local transport authorities
OFT explains competition test
PN 146/03 6 November 2003
The OFT has published advice for local transport authorities (LTAs) to help them decide whether their schemes meet the competition test contained in the Transport Acts. The OFT will continue to provide free informal advice to LTAs on individual schemes.
Download The Tranport Acts: Guidance on the Competition Test (pdf file 176 kb).
Under the Transport Acts, LTAs are permitted to set up quality partnership schemes (see note 4) and ticketing schemes in conjunction with transport operators, in order to implement local plans and policies for transport facilities and services. The competition test assesses whether a scheme has a significantly adverse effect upon competition and, if so, whether that effect is justified by counterbalancing benefits to consumers. It applies to quality partnership, ticketing schemes and tenders for subsidised services under the Transport Acts.
Where a scheme has no significant adverse effect on competition it will satisfy the competition test and can proceed. A scheme which does have an adverse effect on competition may still satisfy the competition test if it can be justified by:
- securing improvements in the quality of vehicles or facilities by, for example, providing better access for disabled passengers
- securing improvements of substantial benefit to users of services such as shorter journey times or more reliable and frequent services
- reducing or limiting congestion and pollution.
Provided the effect on competition of the scheme is proportionate to the benefits it achieves, such a scheme may go ahead.
John Vickers, OFT Chairman, said:
'Travelcards, through tickets and quality partnerships, which may specify minimum standards for local services, are beneficial for passengers and can help reduce congestion. Today's guidance will help LTAs realise the benefits of such schemes for consumers without unnecessarily harming competition.'
1. Transport Acts means the Transport Act 2000 and the Transport (Scotland) Act 2001.
2. Copies of the guidance The Tranport Act 2000 and the Transport (Scotland) Act 2001: Guidance on the Competition Test are available free of charge by calling 0870 60 60 321 or faxing 0870 60 70 321.
3. Schedule 10 to the Transport Act 2000 and section 37 of the Transport (Scotland) Act 2001 contain a competition test which applies where LTAs exercise their functions under the Acts to make or vary quality partnership schemes; make or vary ticketing schemes; or invite or accept tenders for subsidised services under sections 89 and 91 of the Transport Act 1985. The competition test applies only to the exercise of those functions that LTAs can exercise under the Transport Acts.
4. The Transport Act 2000 describes a quality partnership scheme as a 'scheme under which (a) the authority or authorities provide particular facilities in the whole or part of their area, or combined area, and (b) operators of local services who wish to use the facilities must undertake to provide local services of a particular standard when using them (s.114(2))'.
5. If an LTA has made, or proposes to make or vary quality partnerhip or ticketing schemes, or invite or accept tenders for subsidised services, it can make an application to the OFT for a decision as to whether the competition test is met. Any operator of local services who is, or is likely to be, affected by an LTA's exercise of a function can also apply for such a decision. A fee of £5000 is payable for an application under the competition test.
6. It is not necessary to make applications to the OFT to decide whether a scheme meets the competition test. A scheme may be implemented without the prior approval of the OFT. Advice on the application of the competition test is available by contacting the Bus Competition Team, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX or by telephone on 020 7211 8140 or by email at oftbusenquiries@oft.gov.uk
7. The OFT has also published a guideline on the bus ticketing scheme block exemption (see PN 52/02). The Competition Act 1998 prohibits anti-competitive agreements 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.
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