The New Zealand Bus and Coach Association is voicing concerns about the proposed merger between NZ Bus and Kinetic (Go Bus) saying it could lead to a reduction of competition in the industry.
NZ Bus and Kinetic are two of New Zealand’s largest bus companies and are currently seeking clearance from the Commerce Commission to proceed with the deal.
NZ Bus holds key government contracts to operate public bus services across Auckland, Wellington and Tauranga.
Kinetic says the investment will allow it to diversify its New Zealand operation, which includes Go Bus urban and school bus services, SkyBus and Johnston’s, and significantly expand its footprint across the country’s two biggest urban markets, Auckland and Wellington.
Kinetic says the proposed acquisition will only overlap in the supply of urban bus services in the Auckland region.
However, Bus and Coach Association acting chief executive Max Dickens says such mergers are a blow to smaller operators.
“We have seen a trend in the industry in recent years of larger companies consuming smaller ones, leading to an increasingly small concentration of operators and less competitors in the market overall.
“It’s particularly sad to see these companies moving from community-centric, Kiwi-owned and family-run models, to being run by overseas conglomerates and the loss of local understanding that comes with that,” Dickens says.
“Many smaller companies have folded as a result of the pandemic and tender processes. Kinetic is the largest bus operator in Australia, and if this merger proceeds it will fast be on their way to dominance of the Australasian market.
“Increased market power inevitably leads to a reduction in quality of services, something that is already an issue in an industry forced into a race to the bottom through a competitive tender process, where contracts are awarded to the lowest bidder regardless of their quality or working conditions.
“Allowing a critical service provider to become this large will give them the ability to reduce the quality of their services below competitive levels,” Dickens says.
The Bus and Coach Association is urging the Commerce Commission to carefully consider the impact that the merger could have on the New Zealand bus industry which has already “been through the ringer” in the last few years, he adds.
