Missouri Joins Settlement Regarding Proposed Merger Of Nation’s Two Largest School Bus Contractors

September 26, 2007 -- Jefferson City, Mo. — A proposed settlement with the nation’s two largest school bus contractors will help preserve or encourage competition for student transportation contracts in Missouri, Missouri Attorney General Jay Nixon says. Missouri is one of 11 states with anti-trust concerns about the proposed acquisition of Laidlaw International Inc., the nation’s largest provider of contracted student busing services, by FirstGroup (also known as First Student Inc.), the second largest provider of such services.

“Competition often results in better service at lower cost,” Nixon said. “In this case, our concern was that a consolidation of these two major student transportation competitors would result in a significant or complete loss of competition in certain areas, unless there were safeguards in place. Several school districts around the state and the taxpayers in those districts could pay the price for a loss of competition, and our action in this case will help protect them.”

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The settlement filed today in federal district court in Massachusetts requires FirstGroup to provide the Attorney General’s Office with 60 days notice of any future acquisitions of school bus companies in Missouri. It also prohibits FirstGroup from threatening not to bid or withdrawing a bid as a way to force school districts to include contract specifications favorable to FirstGroup.

The settlement primarily affects school districts in the St. Louis metropolitan area, Nixon says, because most of the school districts in the area that contract for transportation services do so with either Laidlaw or FirstGroup. Eighteen traditional school districts in the area and the voluntary inter-district transfer program contract out busing services – 14 with Laidlaw, and three with FirstGroup.

The settlement also provides the Attorney General’s Office with the discretionary authority over the next three years to require FirstGroup to divest the three school district contracts it currently holds in the St. Louis metropolitan area. The requirement to divest may occur if the office determines such a move is necessary to bring FirstGroup into compliance with state or federal anti-trust laws.

“The St. Louis area is where we determined the greatest competition between Laidlaw and FirstGroup existed, and where the most serious anti-competitive impact might occur,” Nixon said. “That is why we insisted on the right to order divestment if necessary. We will continue to closely monitor this market.”

Approximately 380 of Missouri’s school districts provide their own bus service, and 150 contract with private busing companies. Many of the contracts are with smaller companies that may only provide services for one or two routes. Laidlaw is the largest provider of student busing services in Missouri, followed by Durham School Services, and then by FirstGroup. Durham is the third largest provider of such services in the United States.

The other states that filed the proposed settlement with Missouri are Alaska, California, Connecticut, Illinois, Maine, Massachusetts, Minnesota, New Jersey, Rhode Island and Washington. The investigation was conducted by the states in cooperation with the U.S. Department of Justice.

The states also will receive $1.1 million from FirstGroup and Laidlaw in the settlement. Missouri will receive $90,000, which will go into the Missouri Antitrust Revolving Fund for reimbursement of the costs incurred in the investigation.

Source: Missouri Attorney General