The Competition Commission has today published a postscript to the provisional findings of its local bus services market investigation.

It reveals that subsidiaries of Arriva, FirstGroup and Go Ahead Group have taken action which had an adverse effect on competition.

The addendum, which addresses geographic market segregation and operator conduct, describes ways in which certain large bus companies seek to protect their own ‘core’ territories.

The CC has looked in particular detail at the relationship between Arriva and Go North East (a subsidiary of Go Ahead Group) in the North East of England.

However, it has also identified interactions between Arriva and FirstGroup in Chester and the Wirral, and Leicester.

The actions of the managers involved have been published by the CC, but their names have not been revealed.

The evidence seen by the CC shows that this segregation was brought about by extensive communication between certain large operators, signalling, retaliation to entry through competitive responses on other routes, and the sale and acquisition of rivals’ assets.

The evidence has been gathered from company documents and from hearings with past and present executives of the companies involved. Similar patterns of behaviour, most clearly retaliatory conduct, have also been identified in other areas.

The paper is an addition to the CC’s provisional findings which were published in May this year and stated among its conclusions that in many local areas the largest bus operator had persistently faced little or no competition, leading to passengers facing less frequent services and, in some cases, higher fares than where there was some form of rivalry. It also builds on the CC’s provisional findings on tacit coordination which were published in August. These stated that although at that point there was no direct evidence of such behaviour taking place, the necessary conditions were in place for it to occur.

Jeremy Peat, chairman of the 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. In August we noted that bus operators may have the incentive to avoid competing in each other’s territories. 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.

“We have found clear evidence relating to only three large operators, and only in a few areas of the country. We have not been able to conduct a full investigation of a larger number of areas. But our concerns expressed in the provisional findings on tacit coordination that operator conduct could restrict competition in a wider number of areas are further reinforced.

Conduct that restricts competition damages the interests of passengers. The evidence we have now found strengthens the case for our package of remedies, which are in part designed to reduce the potential and incentive for such behaviour. However, the CC is not suggesting any further additions to the proposed package of remedies”

The CC published its provisional decision on remedies earlier this month (PT017), which outlined measures to tackle the barriers to competition it had previously identified.

The CC started its investigation into the local bus market in the UK (excluding London and Northern Ireland) in January 2010.