School bus antitrust pact reached in FirstGroup-Laidlaw deal

September 27, 2007 2 min read

BOSTON (AP) — FirstGroup PLC and Laidlaw International Inc. will sell some of their school bus operations contracts under an antitrust agreement Wednesday with 11 states — a pact expected to allow FirstGroup to complete its $2.8 billion acquisition of Laidlaw on Monday.

The agreement resolves a multistate investigation and lawsuit led by Massachusetts Attorney General Martha Coakley, who argued that combining the nation’s two largest school bus operators would limit competition among private bidders for local school districts’ bus service contracts.

In some areas of Massachusetts such as Cape Cod and the South Shore, FirstGroup and Laidlaw have dominated such contracting, Coakley said.

“Absent this lawsuit and settlement, FirstGroup would have had a monopoly in these areas after the merger, and been able to increase its bid prices to the school districts,” Coakley said.

In most states covered under the agreement, the combined company must sell off some of its district contracts as well as related assets such as buses and depots. Agreement terms vary from state to state.

FirstGroup also agreed to pay the 11 states a total $1.1 million to cover investigative costs.

Besides Massachusetts, the states participating in the settlement are: Alaska, California, Connecticut, Illinois, Maine, Minnesota, Missouri, New Jersey, Rhode Island and Washington.

Connecticut Attorney General Richard Blumenthal said in a statement that the settlement helps protect affordable school bus service.

“Without these measures, the combined company may inhibit or impede competition, which is key to lower prices and better service on school bus service,” he said.

In Massachusetts, FirstGroup will be required to sell nine contracts on Cape Cod, the South Shore and northern Worcester County to another operator approved by the school districts and the attorney general. The new operator hasn’t been determined.

In Boston, FirstGroup will be required to complete the remaining six years on its Boston Public Schools contract and then make its Boston assets available to any other operator that may subsequently win the Boston bid, Coakley said.

The agreement, filed in U.S. District Court in Boston, is subject to court approval.

As a result of the pact, Naperville, Ill.-based Laidlaw and FirstGroup said that they expect to complete their transaction Monday, after expected clearance later this week from the U.S. Department of Justice’s antitrust division.

FirstGroup, the largest bus operator in Britain and the second-largest in the U.S., offered in February to acquire Laidlaw for $35.25 a share and also assume about $800 million in debt. Laidlaw is the largest school bus operator in the U.S., and also operates Greyhound Lines intercity bus services.

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