Watchdog fines bus companies over cartel

A clandestine hotel room deal to fix the running of 10 buses led to two bus companies being fined £848,000 yesterday, in the first punishment meted out to cartels by the Office of Fair Trading under powers it gained last March.

The competition watchdog said staff from the Yorkshire arms of Arriva and FirstGroup, the national bus companies, met in a Wakefield hotel in March to fix a route-sharing deal.

Arriva agreed to withdraw its five buses from two Leeds routes in return for FirstGroup withdrawing from another two routes in the city.

The cartel was hardly on a grand scale - FirstGroup pointed out yesterday that the "isolated incident" involved two routes out of 156 it operated in Leeds alone - and the amount of the penalties appeared to surprise the companies.

Arriva said its "initial reaction is that the fine appears to be at a disproportionate level and the group will need to study the detail of the ruling".

Lawyers said that the OFT clearly wanted its precedent-setting first fine to convey a warning to other potential cartel operators. The £848,000 total includes a "financial penalty for deterrence" of more than £500,000. The OFT said yesterday it "regards deterrence as vital in combating cartels".

But the watchdog also appears to have fashioned the punishment to encourage companies to co-operate, exploiting the ability it gained alongside its new powers last March to offer lenience to companies. "The message is 'whistleblowers please'," said Peter Willis a partner at Taylor Joynson Garrett, the law firm.

FirstGroup will not have to pay any of its £529,852 fine, the OFT said - the company had "asked for lenience first and at an early stage" of an investigation that was triggered by an anonymous tip-off, the OFT said.

The £318,175 fine imposed on Arriva has also been reduced - but by only 36 per cent to £203,632 - under the leniency programme.

"The case shows that the full benefits of leniency are only available to the first one through the door," John Vickers, OFT director-general, said.

Both companies said they had strengthened their internal compliance procedures.

"Financial Times" 1st February 2002