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Rowe Settles School Bus Merger Case
September 26, 2007
Maine Attorney General Steve Rowe announced today that his office has settled a case involving an antitrust challenge to the merger of the two largest school bus contractors in the nation, FirstGroup (also known as First Student, Inc.) and Laidlaw International, Inc. Over the past decade, Maine school districts, like their counterparts around the United States, have increasingly turned to private contractors to provide transportation to the students and families they serve.
The State’s Complaint, filed today in the Federal District Court in Massachusetts charges that FirstGroup’s proposed acquisition of Laidlaw would violate the federal Clayton Act as well as antitrust laws of Maine and the other Plaintiff States. The settlement is set forth in a proposed Consent Decree (an agreed upon court order), which was filed at the same time as the Complaint. The Consent Decree imposes significant remedial conditions, which vary somewhat from State to State.
In Maine, the agreed-upon resolution commits FirstGroup and its subsidiaries to provide the Attorney General with 60 days’ advance notice of any future acquisitions of school bus service company that is active in Maine. In addition, it bars FirstGroup from employing threats not to bid as a means to force districts to adopt contract specifications favorable to the company. Finally, it accords to the Attorney General the discretionary power to order FirstGroup to divest up to two district school bus services contracts (with related assets such as buses, depots and maintenance facilities), if necessary to bring FirstGroup into compliance with Maine law. The divestitures, which must relate to contracts in a broad area around Bangor, including southern Penobscot and Hancock Counties (as well as municipalities in Waldo and Washington Counties), may be ordered during a time period running from July 1, 2008 through the first anniversary of the date on which the school consolidation program now in process has been completed.
“Our review of the transaction found that FirstGroup and Laidlaw were particularly close competitors in the southern Penobscot and Hancock County area,” Rowe explained. “That is the region of our state which we judged the merger could have a serious anticompetitive impact, which is why we asked for and won the right to order divestitures there.” Rowe commended his antitrust staff and the staffs of the other Plaintiff States for their work on the case. He also recognized FirstGroup for its cooperation with the States’ investigation. “We have worked well with FirstGroup in the course of this merger review, and have reached a fair and mutually acceptable result. That bodes well for our relationship in the future,” said Rowe.
The states involved in the complaint are Maine, Alaska, California, Connecticut, Illinois, Massachusetts, Minnesota, Missouri, New Jersey, Rhode Island and Washington.
David Loughran, Special Assistant to the Attorney General, (207) 626-8577