85/10    28 July 2010

The OFT is today consulting on a proposal to recommend an extension of the public transport ticketing schemes block exemption.

The block exemption, subject to certain conditions, automatically exempts certain types of integrated ticketing arrangements from the UK law prohibiting anticompetitive agreements.

The ticketing schemes covered by the exemption involve agreements between public transport operators which may restrict competition and would therefore need careful individual assessment under the Competition Act. Multi-operator travelcards, for example, involve three or more transport operators agreeing the price at which they will sell the travelcard to passengers and how the revenue from the sale of the tickets will be distributed between them.

However, the law also provides that such agreements are exempt where they deliver efficiencies and benefits to consumers without substantially eliminating competition. The OFT considers that the ticketing schemes covered by the block exemption are likely to meet the conditions for exemption because they are likely to produce improvements in the quality and flexibility of public transport ticketing services, for example allowing a passenger to use one ticket for a journey involving travel on more than one operator's services instead of having to buy a number of separate tickets.

The current block exemption expires at the end of February 2011 and the OFT has been reviewing its operation. Subject to further analysis and considering responses to the consultation, the OFT is proposing to recommend to the Secretary of State for Business, Innovation and Skills that he should extend the duration of the block exemption until February 2016 and that no significant changes are made to the block exemption at this stage. There are a number of possible developments over the coming years which the OFT will monitor to see if changes to the block exemption may be appropriate in the future.

The consultation runs until 20 October and a final recommendation will be made by the end of this year.

Cavendish Elithorn, OFT Senior Director of Policy, said:

'The OFT's emerging view is that the block exemption should be extended as the types of integrated ticketing schemes it facilitates continue to provide consumers with a range of practical benefits. We look forward to hearing responses from interested parties, consideration of which will form a key part of our final recommendation.'

If you wish to participate in the consultation, please contact:

Marc Braithwaite or Carlos Martínez Rico
PTTS BE Review
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX

Tel: 020 7211 8732 / 5839
Fax: 020 7211 8757

Email: transport.ticketing@oft.gsi.gov.uk

NOTES

1. For more information about this consultation, please see www.oft.gov.uk/ticketing.
2. The Chapter I prohibition of the Act prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade within the UK and have as their object or effect the prevention, restriction or distortion of competition within the UK. 
3. An agreement that falls within the Chapter I prohibition, but which satisfies the conditions set out in section 9(1) of the Act can be exempted from the prohibitions in the Act. Since 2004, businesses have had to self-assess whether their agreements comply with competition law and, where appropriate, whether they meet the conditions for an exemption under section 9(1) of the Act. Section 6 of the Act also provides that the OFT may recommend to the Secretary of State that a particular category of agreement which it considers is likely to meet the section 9(1) exemption criteria be block exempted by order. 
4. The Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption) Order (SI 2001 No 319) came into force on 1 March 2001 and was amended by the Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption) (Amendment) Order 2005 (SI 2005 No 3347). It covers ticketing schemes that provide multi-operator travel cards, multi-operator individual tickets, through tickets and short and long distance add-on tickets for local travel on buses, trains, trams and domestic ferry services. The block exemption sets out a number of conditions which a ticketing scheme must satisfy in order to benefit from it. 
5. The OFT has published guidance explaining the application of the block exemption: download Public transport ticketing schemes block exemption (OFT439, November 2006) (pdf 297kb).