This article presents arguments to support the hypothesis that there should be both a significant extension of the analysis normally made to forecast how deregulation will affect the level of bus services and a different approach made when obtaining evidence for such analyses. An attempt is made first to show how the approach advocated diverges from more conventional analysis. The evidence used so far in the competition authorities' analyses of the bus industry is then considered. These have concentrated mainly on the issue of predation, and, to a lesser extent, merger. Collusion, predation and merger in buses should be viewed as attempts by firms to restore and improve profits following deregulation in 1985. Their analysis by competition authorities should define the entry conditions which deregulation in 1985 exposed, and the changes since, including some raised barriers. Effective pro-competitive action depends on modifying these conditions. The analysis of predation and merger in buses performed by the Office of Fair Trading and the Monopolies and Mergers Commission are assessed in this light. Some evidence linking the registration since 1985 of agreements in restraint of trade, denoting collusion, with greater than average entry, and other parameters, is presented.
Abstract