To what extent can we rely on contestability in merger policy? Ex post evidence from McGill’s/AWS

Abstract

The McGill’s/AWS merger was cleared by the UK Competition Commission mainly on the basis of its belief that the threat of entry would be sufficient to prevent unilateral effects from arising post-merger. This is very close to argue that these local bus markets were contestable. This ex post evaluation case study based on the publicly available data and information on frequencies and fares suggests that the entry threat may have not been a strong disciplining force post-merger.