privatisation was required to ensure that a competitive environment could be maintained, and through this consumer wants would be satisfied (Mulley and Wright 1986).

The changes were introduced to bring competition into the industry. For that reason the Act also ended the various exemptions from competition legislation which the bus industry had had until that point (Department of Transport 1986, 1). The changes meant that competition law applies to the bus industry in the same way as it applies to other industries in Great Britain (the changes did not apply to the industry in Northern Ireland). Three main areas of competition law were involved. One is the law on restrictive agreements. From the passing of the Act, many agreements between bus operators under which two or more parties accept restrictions on their commercial freedom will have to be registered with the OFT. The second change concerns the law on monopolies. Monopolies in the bus industry from then could be referred by the Director General of Fair Trading to the Monopolies and Mergers Commission. A third area of competition legislation concerns anti-competitive practices. The legislation concerned already applied to the bus industry; bus stations (which were not previously covered) were brought into the scope of the Transport Act. An example of anti-competitive practice in the bus industry is 'predatory pricing' - that is charging fares well below cost - or offering free travel - with the intention of eliminating competition (see subsection on such practices below). Thus, the industry was for the first time made subject to the competition laws dealing with market dominance, mergers, anti-competitive practices and restrictive agreements.

The combined effect of these changes has had a greater impact on the framework for local bus services and the bus industry as a whole than the changes introduced for the coach sector in the Transport Act 1980. The real debate on deregulation for buses concentrated on the issue of quantity licensing. The proposals contained in the 1985 Traffic Act meant that, as in freight, quantity licensing aspects of the previous regulations were removed, although it was proposed to retain and strengthen the quality control of the industry. The programme of privatisation was not nearly so clear-cut since the Act did not incorporate the full proposals of the White Paper Buses which preceded the Act. The White Paper contained additional proposals to alter the structure of the industry by the eventual privatisation of the publicly owned companies and, where necessary, the creation of smaller private bus companies. It envisaged that the varied types of public ownership, particularly local bus provision, would be gradually dismantled and eventually replaced by private companies. It suggested that the route to this should be first, the removal to 'arm's length' of those bus companies under the ownership of local authorities whether these be metropolitan or district councils; second, the breaking up of large units (and especially the Passenger Transport Executives (PTE's) of the metropolitan counties) into smaller units; and finally, the eventual transfer of the whole publicly owned fleet, including the National Bus Company (NBC) into the private sector. In the event, the regional companies under the former NBC and the Scottish Bus Group (SBG) holding companies were privatised between 1986 and 1992 (White 1994).

By 1994, over half the fleets formerly under local authority ownership, including all those in the Passenger Transport Authority areas (the former Metropolitan Counties) had been sold to the