Glaxo Smith Kline made global news because its US activities failed to publish key research data & because of the way in which it illegally promoted its drugs, including to young people.
Barclay's Bank made national news when we all heard of inter-bank lending rate fixing.
Cardiff Bus made regional news, in Wales, following the preliminary findings of the competition appeals tribunal into Cardiff Bus’ activities at the time of the 2Travel competition. (See also what the Traffic Commissioner said, here).
The theme that runs through these three cases is business ethics, or an alleged lack of them. But before we judge Cardiff Bus too much, it’s Cardiff Bus that’s been caught. Although Cardiff Bus appears to have crossed that fine line between defending a business and predation (acting in a predatory fashion) let’s face it, there will be plenty of people within the industry who over the weekend might well be thinking, “There but for the Grace of God go I”.
The history of deregulation has seen its share of similar issues, though few have been on such a scale or have had such an impact. When faced with competition, protecting your business is obviously a natural instinct. Incumbents must have a right to react. Because most competition seems to conclude naturally after a couple of years or fewer, it may be safe to assume that one operator or another has had to take the hit in operating without garnering a profit. Most markets aren’t sustainable with more than one operator.
In this particular case, we need to remember that Cardiff Bus was providing a comprehensive, city-wide, 18-hour, seven days-a-week service; whereas 2Travel was basically in-filling off-peak between school bus workings, just the very thing that deregulation detractors felt was totally unacceptable way back between 1984 & 1986, when legislation was being formed.
And it’s not as if 2Travel appeared as a well-managed business, far from it: this much emerged from the tribunal’s findings and it was this that resulted in the original £20mil claim being disallowed. In a very real sense, Cardiff Bus was the victor, in persuading the tribunal not to award a damaging £20mil settlement that would’ve had serious ramifications for the arm-length company and its shareholder, the city council. Would, for example, Cardiff city have been forced to sell and, if so, might this have destabilised the entire market?
2Travel is nevertheless a defining moment in the annals of the bus industry. Its impact is such that the managing director has decided to resign (possibly as a scapegoat, hounded by the local press). Others who wish to compete against a new threat will henceforward be very careful in formulating their responses. Cardiff Council may yet re-examine its relationship with its bus operator (it previously wanted to sell part of its stake). Might it now do so in a bid to draw a line under this incident?