CAMPAIGNS: Bus firm drives back DTI ruling - Lobbying

When Scotland-based bus company FirstGroup acquired Strathclyde Buses (SB Holdings) in the summer of 1996, the matter was referred to the Mergers and Monopolies Commission (MMC). At the end of January 1997, the MMC published its findings that such a merger ’could act against the public interest’.

When Scotland-based bus company FirstGroup acquired Strathclyde

Buses (SB Holdings) in the summer of 1996, the matter was referred to

the Mergers and Monopolies Commission (MMC). At the end of January 1997,

the MMC published its findings that such a merger ’could act against the

public interest’.



In other words, FirstGroup’s dominance in central and south-east

Scotland was almost certain to deter competition from other

operators.



In line with the MMC’s recommendations, the then Tory minister for

corporate and consumer affairs at the DTI, John Taylor MP, ruled that

FirstGroup should sell one of its Glasgow bus depots and divest itself

of its subsidiary, Midland Bluebird within six months.



Six weeks later, completely contradicting the conclusions drawn by MMC,

transport operator Stagecoach, entered the Glasgow market with a fleet

of 150 buses.



Objectives



FirstGroup wanted to persuade the DTI to revise its decision on

divestment on the back of Stagecoach’s entry into the market, which it

argued disproved the claim that a merger would create a monopoly.



Tactics



In May 1997, the company approached GJW for strategic input and

Bristol-based solicitors Burges Salmon, for legal advice. In June, with

the new Labour government in place, FirstGroup made a formal submission

to the DTI for the findings of the MMC’s report to be reviewed, which it

copied to the Office of Fair Trading.



As the matter not only affected passengers but also employees, it then

set about gaining support from local authorities, MPs, consumer

associations and trade unions, such as the TGWU and Unison. These

lobbied the new Labour competition and consumer affairs minister, Nigel

Griffiths MP, the Scottish Office and the Department of Environment,

Transport and the Regions.



Throughout this period FirstGroup met the interested parties, with the

exception of the DTI, and reported on developments such as Stagecoach

expanding their Glasgow operation.



Results



Last month, the DTI announced that before leaving her post as Secretary

of State for Trade and Industry, Margaret Beckett had decided to vary

the undertakings required by FirstGroup. Rather than following the

renewed advice of the MMC for divestment of Midland Bluebird, she had

settled on a package of behavioural undertakings, covering such areas as

minimum service levels and restrictions on fares.



Verdict



As this campaign resulted in the first ruling to be overturned by the

Department of Trade and Industry against the advice of the Mergers and

Monopolies Commission, there is no doubt that it was a success. The

reasons for this were three-fold.



First, the company made a strong case that the market in Glasgow had

changed significantly, immediately following the first ruling.



Second, FirstGroup drummed up a broad spectrum of support from the trade

unions to the Strathclyde Passenger Transport Executive.



Finally, it could be argued that the January 1997 decision was

advantageous to Stagecoach. While in opposition, Labour MPs such as

Griffiths were openly critical of some of Stagecoach’s activities in

other areas. Indeed the MMC itself had described past actions as

’predatory’ and ’deplorable’.



With the change of government last May, GJW argued that Taylor’s ruling

could sit uncomfortably with the new administration.



Client: FirstGroup

Campaign: To overturn the DTI divestment decision on the merger of

FirstGroup and SB Holdings

Team: GJW Government Relations

Timescale: May ’97 - July ’98

Budget: Undisclosed



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