Western Travel Ltd and G & G Coaches (Leamington) Ltd: A report on the acquisition by Western Travel Ltd of G & G Coaches (Leamington) Ltd

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On 29 May 1990, the Secretary of State for Trade and Industry asked the MMC (see Appendix 1.1) to investigate and report on the acquisition by Western Travel Ltd (Western) of G & G Coaches (Leamington) Ltd (G&G).

In order to establish whether a merger situation qualifying for investigation exists, we are required to determine whether, following the merger, Western supplies over 25 per cent of local bus services in a substantial part of the United Kingdom. In our view, the area specified in the terms of reference (the county of Warwick, and the districts of Coventry and Solihull in the county of West Midlands) represents a substantial part of the United Kingdom. Following the merger, Western supplies over 25 per cent of registered bus miles in the reference area.

Before the merger the Western subsidiary, Midland Red South (MRS), was the main operator of bus services in Warwickshire, and G&G its main competitor in the Warwick and Leamington areas. The effect of the merger has been to eliminate competition in commercial services in Warwick and Leamington and between those towns and Coventry. The two companies also account for the majority of contract services in Warwick and Leamington. However, there have been a number of other bidders for almost all tenders in that area, including both large companies based elsewhere and a number of smaller companies which would seem to offer effective competition for contract services.

Despite the elimination of the previous competition between MRS and G&G, we cannot in this case consider this small local area in isolation. In the reference area as a whole, West Midlands Travel (WMT) is by some margin the largest operator accounting for over 50 per cent of bus miles. It is in a particularly strong position in Coventry, only nine miles from Leamington.

WMT is at present owned by the West Midland Passenger Transport Executive (CENTRO), but consideration is being given to its sale as a single entity to its workforce. We believe that the potential competition from such a powerful operator, particularly after its proposed sale, is in this case sufficient to ensure that Western would not be free to abuse its position in the Warwick and Leamington area. The strengthening of the position of MRS as a result of the merger may also itself enhance potential competition within Coventry by providing a more effective challenge to WMT, the dominant operator.

We have therefore concluded that the merger does not operate and may be expected not to operate against the public interest.

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