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12 Competition considerations
Transport Scotland Act 2001 - Part 2 Bus Services Financial and competition provisions: Section 37 Competition test for excises of bus functions.
The Competition Test
12.1 A sQP sets standards that have been discussed and desirably agreed between authorities and operators, the details of which are then available for consultation; providing all existing or potentially new operators with the opportunity to present their views on the components of the scheme.
12.2 A sQP may raise barriers to entry for new operators or see the exclusion of existing operators from the scheme; however it is important to remember that the main aim is that of improving quality. Operators who do not meet the specified standards required will not be allowed to use the facilities provided, and an operator may consider that as a result of being unable to use the facilities, they are not able to compete well enough in the market.
12.3 A sQP does not automatically have an adverse impact on competition through its exclusion of particular operators as there may be other operators in the area who are able to comply with the standards and who can compete effectively too. A sQP should be designed so that it creates the benefits of competition envisaged in the deregulated bus market; however the 2001 Act contains provisions for resolving any "significantly adverse" impact on competition.
12.4 
Section 37 of the 2001 Act contains the requirement for a sQP to be subject to a 'competition test'. There are three distinct stages to this:
1. Will the scheme have a significantly adverse effect on competition? If it does not, then the competition test will be satisfied. However, if it does, or is likely to, the second and third stages below must be considered.
2. Can justification be made for a scheme that will have a significantly adverse affect on competition? A scheme can be justified if it aims to achieve one or more of three specific objectives:
- securing improvements in the quality of vehicles or facilities used for or in connection with the provision of local services;
- securing other improvements in local services of substantial benefit to users of local services; and
- reducing or limiting traffic congestion, noise or air pollution.
3. Is the effect on competition proportionate or likely to be proportionate to the achievement of that purpose, e.g. do the benefits for passengers outweigh the detrimental impacts on operators?
12.5 The Scottish Government is due to publish guidance on competition issues during 2009. This document will provide guidance on how negotiations on the establishment of a sQP can be structured in order to ensure compliance with competition legislation.
Developing a sQP ( Chapters 7 - 12) - Checklist  |
- What facilities are available for the authority/authorities to promote as part of the scheme?
- Age of existing facilities.
- Clear guidelines should be established on the responsibility and funding of maintenance of facilities.
- Has the transport authority promoted TROs as part of the scheme?
- Who is the Traffic Authority for the roads within the scheme? If it comes within the meaning of the Road Traffic Regulation Act 1984 (c27) then the Scottish Ministers should be informed.
- Will it be phased in and if so over what period?
- Have exclusions from the scheme been considered?
- Has the sQP been subject to a 'competition test'?
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