Background
The Competition Act 1998 (“the Act”) prohibits agreements which restrict, distort or prevent competition within the UK (“the Chapter I prohibition”). Agreements which infringe this prohibition are void and unenforceable, and parties to such an agreement may be subject to fines.
However, certain categories of agreement can be exempt from this prohibition if they produce benefits which outweigh their impact on competition: these are block exemptions. The Public Transport Ticketing Schemes Block Exemption (“the Block Exemption”) is an example of one: it exempts agreements which allow operators to integrate their ticketing systems, meaning that consumers can buy a single ticket for use on the services of multiple operators, rather than having to buy multiple separate tickets for each leg of their journey. Examples include multi-operator travel cards, through tickets, short and long-distance add-ons.
For further information on the Block Exemption, please refer to our insight here.
The CMA’s review
The Block Exemption was first made in 2001, and was recommended for renewal by the CMA in 2015 for a ten-year period until 28 February 2026. Previously, the Office of Fair Trading, between 2003 and 2005 and in 2010, reviewed and recommended that the Block Exemption be renewed.
However, since the Block Exemption's renewal in 2015, there have been a number of developments in local transport markets, including Local Transport Authorities (LTAs) now having greater involvement in the organisation of bus services, and rapid technological developments meaning that much of public transport ticketing is now virtual.
The CMA is therefore now reviewing the Block Exemption, with the intention of making a recommendation to the Secretary of State on whether it should be extended, amended, or allowed to lapse on its expiry in February 2026.
Its review will include considering whether the Block Exemption is still fit for purpose, taking into account the interests of businesses and consumers, and considering the impact of recent developments in technology and industry business models.
The Call for Inputs
The CMA launched a Call for Inputs on 22 April 2024, which will run until 24 May 2024. The CMA is seeking feedback from those with an interest in the Block Exemption, including businesses, trade associations, government bodies, local authorities, consumer groups, and individual transport consumers.
Questions for stakeholders include asking the extent to which the Block Exemption is relied upon, the benefits and impact on competition of ticketing schemes and if there are changes to the Block Exemption which could improve its effectiveness, including to reflect any technological or business changes since the CMA’s last review in 2015. The feedback should centre on the operation and application of the Block Exemption.
Non-confidential versions of the responses will be published on the CMA's webpages, and the evidence gathered will be used to inform the CMA's recommendation to the Secretary of State on whether the Block Exemption is to be amended or replaced.
Looking ahead
The recommendation to the Secretary of State, and any resulting variation or replacement of the Block Exemption has the potential to greatly affect both stakeholders across the public transport sector and consumers who purchase public transport tickets.
Ensuring that they reflect concerns and developments in the sector, particularly in relation to the use of technology, is therefore key. If you would like to provide views on the Block Exemption, please get in touch with us and we can help you prepare a response to the Call for Inputs.
If you have been impacted by the Block Exemption and are keep to share your thoughts and feedback with the CMA, please get in touch with us. We would be happy to discuss points for submission, and are able to submit a response on your behalf.
Additionally, if you have any questions about block exemptions or competition law more broadly, please contact one of the authors.
Authors: Jonathan Branton, Dimitris Sinaniotis and Katie Hurst
