Bus companies’ secret deal left passengers worse off, report reveals

TWO bus companies drew up a secret deal which left passengers worse off, a government watchdog has revealed.

Arriva North East and Go North East made an agreement preventing passengers getting more frequent services and lower prices, according to an initial review by the Competition Commission.

Documents have revealed that if either company tried to encroach on the other’s designated territory, they were threatened with retaliation in the form of new routes and more frequent buses.

The deal followed Arriva’s launch of several services in competition with Go North East on the Coast Road – linking Newcastle to Wallsend and Whitley Bay – and Go North East’s launch of a cut-price service between Newcastle and Ashington.

Negotiations then took place and a deal was drawn up for Go North East to acquire three services in North Tyneside and Arriva to get 17 services and drivers based at Go North East’s Ashington depot in return.

However, the talks stalled and eventually Go North East were handed the Hexham-to-Newcastle routes.

Senior staff at the two firms also agreed in e-mails, phone calls and meetings over a four-year period not to compete with each other.

Investigators said they felt there had been more talks than they would normally expect between rival firms.

A report by the commission said: “We have been struck by the sensitivity and specificity of the topics discussed, including in some instances a willingness to disclose what would ordinarily be regarded as commercially sensitive information.

“There were frequent contacts between Go North East and Arriva, including the disclosure of financial information in relation to possible route and asset sales, intended competitive moves, and suggestions for options to reduce competition across routes and operating areas.”

Both companies run services in south east Northumberland and North Tyneside, with one of Go North East’s depots being based in Percy Main.

The report also said that both companies increased routes and services if small independent firms set up in their territories.

Jeremy Peat, chairman of the commission’s local bus market investigation group, said: “One of our main concerns in this investigation has been the number of areas where one company has faced little or no competition over an extended period of time.

“We have now found that some large bus companies have gone about their business in ways that adversely affected competition in some areas, as we feared.

“We have found evidence of a clear perception among some operators that some areas belong to a particular company and of behaviour designed to maintain that situation, particularly threats of retaliation when attempts are made to encroach on their territory.”

Officials at Nexus, which helps control public transport across Tyne and Wear and into Northumberland, has hit out at the actions of the bus firms.

Bernard Garner, director-general of Nexus, said: “If these bus company managers had spent more time on the quality of service they offered passengers and less time bouncing between turf wars and secret deals, then the region might have a better bus service.

“The existing bus market has failed the passenger here.

“I believe the time is now right to consider new ways to give local people the bus service they deserve and the local economy needs.

“We will be studying the Competition Commission’s provisional findings in detail.

“We will respond with our own views on what local remedies are needed.”

A final report by the commission is due out in January, with proposals already being mooted for new tickets and limits on bus timetabling.

An Arriva spokesperson said: “We note the commission’s addendum.

“We will be considering the full detail of the addendum and will respond to the commission in due course.

“We therefore do not feel it appropriate to comment further at this stage.”

A spokesperson for Go-Ahead Group said: “The Competition Commission has already published its report and recommendations for remedies last month.

“Nothing the commission has published in the addendum has made it change its remedies or resulted in it suggesting any further additions.

“The issues raised in relation to the north east in the addendum relate to historical issues in one subsidiary of the group’s business.

“As the Confederation of Passenger Transport pointed out on publication of the report by the Competition Commission, the commission has confirmed it has found only limited issues resulting in any adverse effect on competition and has expressly ruled out structural change of the industry, price controls or increased regulation.

“The group remains committed to working with regulators to ensure that full and fair competition prevails at all times.”