Corporate report

Bus Services Bill: CMA recommendations and DfT response

Published 25 November 2016

This is a summary of the CMA’s recommendations to government on competition issues in the Bus Services Bill. See the correspondence page for the CMA’s full letter of 29 June 2016.

CMA recommendation	Government response
1. The government should make clear (in the Bill, secondary legislation and/or guidance) that local transport authorities (LTAs) are expected to assess, and if possible test, whether the deregulated market and/or partnership arrangements can deliver their objectives before seeking to introduce franchising arrangements.	“The Bill requires local authorities to undertake an assessment of their proposed franchising scheme, including comparing and assessing it against one or more other courses of action. The statutory guidance to be issued will expand on this point and will be used to implement this recommendation.”
2. The government should make clear (in the Bill, secondary legislation and/or guidance) that where an LTA has decided that only franchising can deliver the desired outcomes, LTAs must have considered fully the implications for consumers arising from the loss of competition within the market and how best to mitigate any harm arising.	“The Bill already requires authorities to consider the effects of their proposed scheme, and we will ensure that the need to specifically consider the effects on competition are referenced in the statutory guidance.”
3. The government should make the CMA a statutory consultee on the introduction of franchising schemes (as we are in relation to partnership arrangements) to ensure competition issues are sufficiently identified and addressed.	“[W]e will [therefore] look to encourage authorities to engage fully with the CMA as they develop and assess their franchising proposals. We will bring forward amendments to the Bill with a view to ensuring that the CMA appears as a required consultee for franchising schemes, subject of course to the necessary clearances.”
4. The Bill should provide a route for LTAs to share information with the CMA for relevant purposes.	“This is something that we will seek to address in guidance, where we intend to encourage authorities to work constructively with the CMA as schemes are developed and during the consultation process. We can use this guidance to remind authorities of the legal framework within which they have to operate, and to highlight the issues that are of particular relevance in the context of developing franchising and enhanced partnership proposals.”
5. The government should ensure that there is a role for competition both in the allocation of routes and slots, and in stimulating ongoing improvement and innovation by operators and/or new entrants.	“The provisions at clause 12 of the Bill are designed with precisely this outcome in mind. Where an enhanced partnership includes requirements in relation to the frequency or spacing of services on a particular route, we have provided a new mechanism to ensure there is flexibility to accommodate competition and innovation by operators or new entrants. The detail of this mechanism will be set out in regulations, and our initial thinking on how we will use this power is set out in the policy scoping notes which we published on 16th June.”
6. The government should ensure that voting mechanisms for enhanced partnership plans and schemes ensure that the views of smaller operators are sufficiently taken into account, and do not unnecessarily exclude contractors, community transport operators or other interested parties.	“[A]ll operators running local bus services in the area to which an enhanced partnership related should be able to have their say on the proposals. The voting mechanism will be set out in secondary legislation, and our current thinking on how it will work is set out in the policy scoping document.”
7. The government should require LTAs to review an enhanced partnership scheme if it has reason to believe a change of circumstance has resulted in the scheme no longer meeting the competition test.	“We agree and intend to implement this recommendation through the statutory guidance that will be issued in relation to Enhanced Partnership schemes. Our current intention is to consult on a draft of this guidance in the autumn.”
8. The government should ensure that frameworks for the pricing and structure of multi-operator travel cards do not restrain operators from making their own decisions about pricing their own services.	“We agree with this recommendation which we see as relating primarily to partnership and advanced ticketing schemes. We will address your points in the relevant statutory guidance or issue non-statutory guidance where relevant statutory guidance powers are not available.”
9. The government should ensure that increased collection and sharing of data must not lead to anti-competitive information sharing between individual operators.	“[A]ny information gathered for the purposes of establishing an enhanced partnership or ticketing scheme should be appropriately protected. Again, we will address your points in the relevant statutory guidance or issue non-statutory guidance where relevant statutory guidance powers are not available.”