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FIRST EDINBURGH BUSES NOT PREDATORY

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Scottish bus company First Edinburgh Limited has not infringed the ...
Scottish bus company First Edinburgh Limited has not infringed the

Competition Act, the OFT has found.

The OFT received a complaint from a rival bus operator, Lothian Buses

plc, that First Edinburgh was abusing a dominant position by

predatory pricing and by increasing services in the Greater Edinburgh

area. Lothian also alleged that First Edinburgh used profits from

other routes to subsidise its routes within the Greater Edinburgh

area.

The OFT has concluded that it was not abusive for First Edinburgh to

reduce its fares or increase services as the balance of evidence

suggests that this was a reasonable commercial strategy, from which

passengers benefited, rather than an unlawful attempt to push Lothian

out of the market.

The OFT investigation found that Lothian, rather than First

Edinburgh, was the largest bus operator in the Greater Edinburgh

area, but that First Edinburgh was likely to be dominant in the area

surrounding Edinburgh. In some circumstances a firm that has a

dominant position in one market may be found to have abused that

position by conduct in another market.

The OFT found evidence that First Edinburgh's prices were low enough

in comparison to its costs to raise questions about predation.

However there was evidence that First Edinburgh did not intend to

drive Lothian (the larger firm locally) from the market, and that it

did not believe that it was capable of doing so. More compelling

evidence was found that First Edinburgh was pricing low in an attempt

to establish a more secure commercial basis for its Edinburgh

operation.

The OFT therefore concluded that First Edinburgh's conduct

represented legitimate competition. Consumers in Greater Edinburgh

benefited from a period of low fares and higher frequencies without

competition being weakened.

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