Completed acquisition by Stagecoach (North West) Ltd of White Star Motors

No. ME/1238/03

A report under section 125(4) of the Fair Trading Act 1973 on the advice given on 29 August 2003 to the Secretary of State for Trade and Industry under section 76 of the Act

THE PARTIES

Stagecoach (North West) Ltd (Stagecoach North West) provides bus services in and around Cumbria and Lancashire. Stagecoach is one of 14 regional bus operations owned by Stagecoach Group plc (Stagecoach Group) which has a 16 per cent  share of bus services in the UK.  In the year to end April 2002, Stagecoach North West reported pre-tax profits of £3.6 million on a turnover of £37.9 million and gross assets of £61.3 million.

White Star Motors (White Star) was a small independent bus operator based in Lockerbie and offering services in and around Lockerbie.  In the year to end March 2003, White Star reported a turnover of £0.5 million.

JURISDICTION

The merger satisfies the share of supply test of the FTA in respect of the supply of bus services in North West England and South West Scotland.

ASSESSMENT AND RECOMMENDATION

The acquisition qualifies on the share of supply test of the FTA. The parties overlap in the supply of bus services in and around the towns of Carlisle, Dumfries, Annan and Lockerbie. 

The merger provides Stagecoach with a total share of 43.1per cent (increment 5.2 per cent) of Dumfries and Galloway County Council contracts although all White Star contracts are to be re-tendered over the next four years.  Furthermore, a large number of other operators able to bid for these contracts remains. 

White Star's only commercial route between Lockerbie and Carlisle offered an infrequent service, carried about 2 per cent of the number of passengers of  Stagecoach's service and did not serve interim towns along the route.  As a result, the parties' routes overlapped directly only along the last one and a half miles into Carlisle. Third parties considered entry to be relatively easy and were generally unconcerned by the merger.  It is therefore difficult to conclude that White Star posed a substantial competitive constraint on the Stagecoach operation along that route.  The merger is therefore considered unlikely to lead to a substantial lessening of competition.

On these grounds we recommend that this merger is not referred to the CC.

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