Call for evidence outcome

Public transport ticketing scheme block exemption: call for evidence

Updated 18 February 2022

This was published under the 2019 to 2022 Johnson Conservative government

The Public Transport Ticketing Scheme Block Exemption (the ‘Block Exemption’)^{[footnote 1]} specifies that certain forms of agreements between transport operators are exempt from the prohibition on anticompetitive agreements in the Competition Act 1998. The agreements in question are those which allow operators to integrate their ticketing systems, meaning that consumers can buy a single ticket for use on the services of multiple operators. These agreements are generally seen as beneficial, and the aim of introducing the Block Exemption was to encourage their use.

The Block Exemption was first made in 2001. It was extended for a period of five years in each of 2005, 2011. In 2016, it was extended until 2026, and amended to require that the Secretary of State for Business, Energy & Industrial Strategy report on the extent to which it is achieving its objectives in 2021. The Secretary of State’s report will:

• set out the objectives intended to be achieved by the Block Exemption;
• assess the extent to which those objectives are achieved; and
• assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved with a system that imposes less regulation.

The Government is issuing this call for evidence to assist the Secretary of State in preparing this report. The Government would welcome responses with all those with an interest in the Block Exemption.

General

We are issuing a Call for Evidence to assist the Secretary of State in reporting on whether the Public Transport Ticketing Scheme Block Exemption is achieving its objectives.

Consultation details

Issued: 22 March 2021

Respond by: 24 May 2021

Enquiries to:

Ticketing Block Exemption Review Team
Competition and Consumer
Department for Business, Energy and Industrial Strategy
1 Victoria Street
London
SW1H 0ET

Email: ticketingblockexemption@beis.gov.uk

Audiences: Those with an interest in the Public Transport Ticketing Scheme Block Exemption, including businesses, trade associations, government bodies, local authorities, consumer groups, individual transport consumers, or any other parties that may have an interest in passenger transport issues.

Territorial extent: The Public Transport Ticketing Scheme Block Exemption extends to England, Wales, Scotland and Northern Ireland.

How to respond

Email to: ticketingblockexemption@beis.gov.uk

Please do not send responses by post to the department at the moment as we may not be able to access them.

When responding, please state whether you are responding as an individual or representing the views of an organisation.

Your response will be most useful if it is framed in direct response to the questions posed, though further comments and evidence are also welcome.

Confidentiality and data protection

Information you provide in response to this consultation, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Data Protection Act 2018 and the Environmental Information Regulations 2004).

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We will summarise all responses and publish this summary on GOV.UK. The summary will include a list of names or organisations that responded, but not people’s personal names, addresses or other contact details.

Quality assurance

This consultation has been carried out in accordance with the government’s consultation principles.

If you have any complaints about the way this consultation has been conducted, please email: beis.bru@beis.gov.uk.

Background

Introduction

Public transport in Great Britain (except in London) has been mainly provided on the commercial initiative of transport operators. In deciding where and when to operate, what fares to charge and what ticket types to offer, transport operators have been governed by the same competition rules as any other business. The rules are designed to ensure that consumers benefit from competition between operators.

Public transport ticketing schemes are written agreements between transport operators that allow passengers to purchase tickets that are valid on the services of all participating operators. Without these schemes, passengers travelling on a journey that involves the services of more than one operator would have to buy separate tickets from each operator. These schemes therefore increase convenience for passengers. Examples include multi-operator travel cards, through tickets, short and long-distance add-ons.

Depending on the scheme in question, public transport ticketing schemes may prevent, restrict or distort competition, as they rely on a degree of cooperation between competitors to operate.

The Government’s recent Bus Strategy set out its intention to extend arrangements for multi-operator and multi-modal ticketing, requiring that common tickets, passes and daily capping be available on all bus services irrespective of operator, at little or no premium to single-operator fares; that progress should be made towards multi-modal ticketing between bus, tram and rail; and that all local bus services outside London be operated under either the “enhanced partnership” or franchising provisions of the Bus Services Act 2017, which disapply certain aspects of competition law. The Government also set out its intention to integrate new forms of provision, such as demand responsive transport and “mobility as a service” into the same arrangements.

Exemption from the Chapter I Prohibition

The Competition Act 1998 contains a general prohibition against agreements between businesses which restrict competition. This is referred to as the ‘Chapter I Prohibition’.

An agreement which would infringe the Chapter I prohibition may however be exempted, where the benefits to consumers from the agreement outweigh the harm to competition. The Competition Act specifies four conditions which need to be met, for this exemption to apply:

• The agreement must contribute to improving production or distribution, or promote technical or economic progress.
• The agreement must allow consumers a fair share of the resulting benefits.
• The terms of the agreement must be indispensable to achieving the beneficial objectives.
• The agreement must not afford the opportunity for the parties involved to eliminate competition in respect of a substantial part of the products in question.

Ordinarily, it is the responsibility of businesses to satisfy themselves that an anticompetitive agreement meets these four conditions and is therefore exempt from the Chapter I prohibition. Were the parties to face an allegation that their agreement infringed the Chapter I prohibition, they would have the burden of proving that the four conditions were met. There is a risk that businesses may not enter into cooperation agreements which would benefit consumers, because they cannot be sure that the agreement would meet the four conditions for an exemption, and do not wish to risk infringing the Chapter I prohibition.

Block Exemptions

The Competition Act created a mechanism for the Secretary of State to make an order exempting particular categories of agreements, where in the CMA’s opinion, agreements within the category are likely to meet the four conditions for exemption. These are known as ‘block exemptions’. A block exemption means that a business does not need to assess a relevant agreement against the four exemption criteria in the Competition Act. Instead, if they ensure their agreement falls into the category described by the block exemption, they can be certain it is exempt from the Chapter I prohibition. A block exemption can therefore encourage businesses to enter into beneficial cooperation agreements, by removing the risk of an infringement of the Chapter I prohibition.

The Public Transport Ticketing Schemes Block Exemption

The Public Transport Ticketing Schemes Block Exemption (the ‘Block Exemption’)^{[footnote 2]} was made in 2001, on the basis that certain ticketing schemes between transport operators were likely to meet the four conditions for exemption from the Chapter I prohibition.

The objective of the Block Exemption is to facilitate the development and provision of integrated ticketing schemes by transport operators, the potential consumer benefits of which include:

• Better quality bus services and improved transport networks.
• Flexibility of choice on specific routes.
• Increased geographical coverage of services for passengers by linking routes of operators.
• Increased patronage on public transport.

In the absence of the Block Exemption, transport operators may decide not to enter into ticketing scheme agreements, because they wish to avoid breaching competition law. In these circumstances, consumers will not enjoy the potential benefits identified above. The Block Exemption is therefore intended to provide comfort that agreements which facilitate integrated ticketing systems are exempt from the Chapter I Prohibition, provided they meet certain conditions.

For the Block Exemption to apply, the ticketing scheme must fall into one of the following five categories for schemes, in addition to meeting certain specific conditions:

• Through tickets
• Multi-operator individual tickets (MITs)
• Multi-operator travel cards (MTCs)
• Short-distance add-ons
• Long-distance add-ons

The conditions in the Block Exemption attaching to each category of ticketing scheme are intended to increase operators’ confidence to invest in appropriate systems and to offer useful tickets to the public without reducing their incentives to compete in other ways, including by offering cheaper tickets that are only valid on their own services.

To assist the Block Exemption in achieving its objectives, the CMA has published guidance on its applicability. The purpose of this guidance is to help operators, local authorities and scheme administrators assess ticketing schemes to decide whether they fall within the scope of the block exemption.

Read the guidance, which includes the full terms of the block exemption

The 2017 Bus Services Act also includes provisions disapplying certain aspects of competition law in respect of Enhanced Partnership and franchising agreements made under it.

The Statutory Review

The Block Exemption was first made in 2001. In 2015, the CMA recommended that the Block Exemption be extended until 2026. The Government assessed of the impact of extension, concluding that allowing the exemption to lapse risked incurring additional costs to transport providers and could lead to a reduction in investment and development of ticketing schemes. The block exemption was subsequently extended for ten years in 2016 and will expire in 2026.

In respect of bus transport, the Government has recently launched a national strategy setting -out the vision and opportunity to deliver better bus services for passengers across England, through ambitious and far-reaching reform of how services are planned and delivered. The Government regards the integration of ticketing between transport operators is an important part of the quality of the transport system. The Block Exemption is therefore an important part of the Government’s policy to support strong transport networks. There are indications that multi-operator ticketing is relatively widespread and provides benefits to consumers. The most recent TAS Partnership National Bus Fares Survey (2019) found that 77% of all sample journeys in the survey had a multi-operator alternative, although this varied between, markets and region.

When the Block Exemption was amended in 2016 to extend its duration, a provision was included to require the Secretary of State to carry out a review of the Block Exemption after 5 years,^{[footnote 3]} and publish a report which:

• sets out the objectives intended to be achieved by the Block Exemption;
• assesses the extent to which those objectives are achieved; and
• assesses whether those objectives remain appropriate and, if so, the extent to which they could be achieved with a system that imposes less regulation.

The Government is publishing this call for evidence, to assist with the preparation of the Secretary of State’s report.  

Consultation questions

1. What are the benefits of integrated ticketing schemes? To what extent do consumers enjoy a fair share of these benefits?

2. How effective has the Block Exemption been at encouraging integrated ticketing schemes? Please provide examples and reasons for your answer.

3. Has the Block Exemption given operators confidence to invest in appropriate systems and technology to deliver multi-operator, including multi-modal, products?

4. Are you aware of or have you experienced any difficulties in applying the Block Exemption criteria? To what extent does this vary across modes of transport?

5. Has the Block Exemption inhibited any developments in the last five years that could have benefited consumers? Please provide examples and reasons for this.

6. Do you consider that the Block Exemption will encourage the use of integrated ticketing schemes which involve new modes of transport, such as Mobility-as-a-Service ticket types, or public bicycle or e-scooter hire schemes?

7. Are you aware of, do you foresee or have you encountered any difficulties in applying the Block Exemption criteria in relation to new modes of transport?

8. Have developments in transport services, including the development of new transport services such as Mobility-as-a-Service, impacted on the effectiveness of the Block Exemption at encouraging integrated ticketing schemes?

9. Has the Block Exemption prevented agreements establishing ticketing schemes from containing unnecessary restrictions on competition? If not, please provide examples.

10. Has the Block Exemption led to a reduction in competition between transport operators in any aspect other than the pricing of multi-operator tickets and the sharing of revenue from those tickets (e.g., quality, reliability, flexibility)?

11. To what extent could integrated ticketing schemes be encouraged by a system which imposes less regulation than the Block Exemption?

12. Have legislative changes such as the Bus Services Act 2017 (or other changes in the transport market), impacted on the effectiveness of the Block Exemption?

1. The Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption) Order 2001 S.I. 2001/319. ↩

2. The Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption) Order 2001 S.I. 2001/319. ↩

3. This provision was included in line with the general obligation established by section 28 of the Small Business, Enterprise and Employment Act 2015. ↩