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Price-fixing: Coach companies fined; Transtar Travel received highest penalty November 4, 2009

Posted by hafizbam in Express Coach, Miscellaneous, Transport Events.
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A Transtar Travel coach.

A Transtar Travel coach. Transtar's fine is the highest among the 17 parties involved. Photo by mynetbizz.

 

16 OPERATORS COLLUDED TO SET MINIMUM PRICES FOR TICKETS

Sixteen coach operators plying between Singapore and Malaysia and their association have been fined S$1.69 million for price-fixing.

The Competition Commission of Singapore (CCS) has found the companies and the Executive Bus Agencies Association (EBAA) guilty of setting a minimum price for coach tickets sold here and for a fuel and insurance surcharge on each ticket.

This collusion took place between 2006 and June last year.

The fines, ranging from $10,000 to $518,167, are pegged to the company’s size and the amount earned from the price-fixing.

The total fine is the biggest penalty handed down by the CCS, which promotes healthy competition in the various industries and administers the Competition Act.

In the only other time it has wielded its powers, it fined six pest exterminators a total of $263,000 for bid-rigging in January last year.

In the latest case, the EBAA, which represents 26 coach operators with 60 per cent of the market share, instituted a minimum ticket price for tickets to destinations in Malaysia, including Kuala Lumpur, Ipoh and Genting Highlands.

This minimum price, first set at $25 in 2005 for a one-way ticket to Kuala Lumpur, edged up to $29 over the years.

Until that $25 minimum price was set, most of these coach companies were charging $20 or $23. A spokesman for one of the companies told the CCS that they were managing to cover their costs even at the lower price, except profits were thinner.

The coach companies said in their defence that they agreed to this minimum price to forestall a price war among themselves.

This cut no ice with the CCS. In its judgement report, it said the practice amounted to “blatant price-fixing”, which deprived consumers of the “efficiencies and innovation” which result when healthy business rivalry prevails.

Although some companies chose to charge less than the minimum agreed upon, the CCS deemed them just as liable because they had been party to the price-fixing.

On the matter of the levying of a fuel and insurance surcharge, the CCS also found out that the EBAA bought insurance policies in bulk at 30 cents, sold them to its members at 50 cents, and then directed them to levy a surcharge – $2 extra in the case of Kuala Lumpur-bound passengers. Over the years, the surcharge was raised to $8.

EBAA spokesman Sebastian Yap, pointing out that the surcharge also covered higher fuel prices, added: “Business has been hit by budget airlines and H1N1. We are just trying to help our members meet costs.”

All parties involved have since stopped imposing the minimum selling price and the surcharge.

Transtar Travel, which received the highest penalty, said it would appeal against the fine.

Konsortium Express & Tours also said it would appeal; Grassland said it would not, while Five Stars Tours and the EBAA were undecided.

The Consumers Association of Singapore’s executive director Seah Seng Choon said the fines send out a “strong signal” about the unacceptability of price collusion.

“Pleading ignorance is no excuse and the law has been there for a long time,” he said. He called on trade associations to educate their members on the Competition Act.

Investigations of the coach companies followed a report in Lianhe Zaobao about the fuel charges levied by coach companies. The CCS found damning evidence in the EBAA’s minutes of meetings and in interviews with EBAA members.

All parties in the latest case have two months to pay the fines. They may, with the CCS’ approval, pay them in instalments.

The CCS has looked into 98 cases of possible infringements of the Act; investigations have been completed for 74, and 24 are still being probed.

- The Straits Times, page A3, Wednesday November 4 2009

Breakdown of penalties imposed:

1. Transtar Travel – $518,617
2. Five Stars Tours – $450,207
3. Konsortium Express & Tours – $337,635
4. Regent Star Travel – $103,875
5. Gunung Raya Travel – $76,668
6. GR Travel – $52,432
7. Grassland Express & Tours – $ 27,706
8. Sri Maju Tours & Travel – $ 24,600
9. Enjoy Holiday Tour – $23,425
10. WTS Travel & Tours – $13,611
11. Alisan – $10,807
12. Travelzone Network Services – $10,000
13. T&L Tours – $10,000
14. Nam Ho Travel Service – $10,000
15. Lapan Lapan Travel – $10,000
16. Luxury Tours & Travel – $10,000
17. Express Bus Agencies Association – $10,000

TOTAL: S$1,699,133

A big win for the budget airlines competing in the same markets, especially the Singapore – Kuala Lumpur route, now that potential customers will think twice about where their money is going to. Nevertheless, with lower fares and more point-to-point services, demand for express coach services should not be hit too hard by this bad publicity.

I’m just wondering if I had been charged more than I should for the Transtar ticket I just bought. Hmm…

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