18 September 2008

Cavalier take-over cleared by OFT

This afternoon the Office of Fair Trading (OFT) published its findings into the take-over of Cavalier Contracts by Stagecoach. It confirmed that it does not wish to refer the purchase to the Competition Commission. In its report it claimed that there was only "minimal" duplication in services and overlap and that it "was not clear" whether Cavalier's subsidiary Huntingdon & District would be a "definite" operator along the St Ives - Cambridge Guided Busway (opening in around 6 months) so this seems to have ruled out the potential for a reduction in competition along the route and the detriment this can cause, especially along a route - which is to remain out-of-bounds to all operators except Go Whippet of Fenstanton (and Stagecoach) for the first five years of operation!!

Stagecoach Cambridgeshire had been forced to run the Cavalier Contracts operation separately from its own services; had complied with the OFT by putting on-hold any sideways movement of its management/supervisory staff to Cavalier; and had hired-out Peterborough drivers to a new Cavalier outstation at the city's Ikea Distribution Centre, following alterations to Cavalier services at the end of last month - these service alterations had been registered with VOSA prior to the OFT applying the brakes and so were permitted to go ahead unhindered. In addition, Peterborough depot had taken on the responsibility to maintain 9 Dennis Darts based at Cavalier's main Long Sutton depot.

The OFT's decision in Stagecoach's favour will have come as a huge sigh of relief for those at Cowley Road in Cambridge and also to the those at the firm's HQ in Perth, not least so that a director no longer needs to write to the OFT every 10 days to confirm their stringent undertakings hadn't been broken, but also because divestment is no longer an option - and Huntingdon had been divested once before - in 1995 as a result of Stagecoach purchasing Cambus & Viscount.

"Are the OFT a little anti-Stagecoach", you may ask? The OFT showed no concern about Go Ahead purchasing its neighbouring smaller operators on its home turf in the north-east; the same of First's Truonian purchase (cleared within 2 months of purchase); and Arriva's unorthodox purchase of a single route from KMP in North Wales. Yet Stagecoach's recent Cavalier, Rennies and Rapsons purchases have all been halted while in-depth scrutiny ensues.

Back in 1994, the then named Monopolies & Mergers Commission described Stagecoach's tactics in Darlington as "deplorable, predatory and against the public interest"; this followed an investigation into Stagecoach's purchase of Darlington Transport Company (DTC), who'd sold to Yorkshire Traction. In retaliation to being outbid, Stagecoach operated free buses that mirrored the Darlington Transport ones but a few minutes in front and offered drivers £1,000 to move across; Yorkshire Traction withdrew its bid for DTC and almost immediately the municipal operator went into administration, allowing Stagecoach to take-over as the dominant operator of the town (and end the free buses). This action made national headlines when a World In Action programme in 1997 spent 30 minutes deploring Stagecoach, its actions and its policies. The then shadow Labour transport minister was quoted as saying "Stagecoach will get away with whatever they can".

Much has changed since 1994, though those in Darlington and those in the transport regulatory bodies will be very mindful of Stagecoach's past - a past that could be returning to haunt them with in-depth scrutiny of every purchase it makes.