Competition Act, the OFT has found.
The OFT received a complaint from a rival bus operator, Lothian Buses
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
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
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.