128.Section 152(4) removes the present constraint, imposed by section 92(1) of the 1985 Act, that in exercising powers to subsidise public passenger transport services under section 9A of the 1968 Act and section 63 of that Act local authorities must behave “so as not to inhibit competition”, a provision which requires them to consider whether competition might be inhibited, however slightly. (The duty also applies to London Regional Transport to the extent that it still subsidises such services.) This is replaced with a new duty to have regard to the interests of the public and of operators and, in the case of local transport authorities, is modified by the provisions referred to in the next following paragraph.
129.Section 153 introduces Schedule 10 which contains provisions applying a competition test in relation to the exercise (including the proposed exercise) of three functions of local transport authorities, namely:
the making and varying of QP schemes
the making and variation of ticketing schemes
invitations to tender and acceptance of tenders for subsidised services under the 1985 Act (see paragraph 1 of the Schedule).
130.Paragraph 2 of Schedule 10 specifies that the test is met unless the exercise of a function has, or is likely to have, a significantly adverse effect on competition which cannot be justified in accordance with that paragraph. A scheme or an exercise of service subsidy functions may be justified if its purpose is one of those set out in paragraph 2(3) and the effect on competition is, or is likely to be, proportionate to the achievement of that purpose.
131.Paragraphs 3 and 4 provide for a relevant authority or operator of local services to apply to the Director General of Fair Trading (the “DGFT”) either before or after exercise of the function for a decision on whether it will meet or has met the competition test. Paragraphs 5 to 10 provide for the DGFT to investigate on his own initiative, for example, after a complaint has been received. For the purpose of an investigation he is given powers to obtain information and documents by paragraphs 6 and 7, subject to the provisions as to confidentiality in paragraphs 8 and 9. Any decision made on such an application or following such investigation must be published with reasons (paragraph 11).
132.The DGFT may enforce his decisions by giving to the authority or authorities exercising the function directions in accordance with paragraph 13, including directions to vary or revoke a scheme or to require a tender contract to be entered into with another operator.
133.Paragraph 14 makes it an offence, punishable with a fine up to level 5 on the standard scale (£5,000), to give the DGFT false or misleading information. Paragraph 16 makes provision for the charging of fees by the DGFT in connection with his functions under the Act.