Competition Commission: Example 2

The Competition Commission

An Example of How it Works

Companies involved:

1. Arriva

2. First Group

3. National Express

4. Go-Ahead

5. Stage Coach

What they did:

They all charged unusually high prices and made the market distribution uneven so one company would dominate in a certain area of Britain, and another company would dominate another.

They also acted predatory to stop new companies entering the market.

Why the competition commission get involved?

Out of an industry worth £6.3 billion they dominated 2/3s of it, they would wholly dominate it if it wasn’t for London and Northern Ireland where there are other companies operating they would fully dominate the market. This shows that they are oligopolising the market.
Another reason why the competition commission got involved was not allowing competition in the market and allowing them to price fix.

The outcome of the investigation

The competition commission are still investigating these claims; however it is more than likely that the included firms will be fined for their activities.

How did they compromise consumer welfare?

The companies kept prices of tickets artificially high which lowers consumer surplus, gives the consumers less choice and generally lowers welfare due to this.

----

By Sean, Tom, Michael, Craig and Stephen