Federal court settlement will change school bus company
By Caitlyn Kelleher JOURNAL REPORTER

The Ashburnham-Westminster School District's bus contract is one of nine in the state that needs to be sold by the newly merged FirstGroup and Laidlaw bus company. The district offers bus transportation to all of it's students. JOURNAL PHOTO/JEFFREY W. BOUDREAU

The Ashburnham-Westminster Regional School District is one of nine districts in the state that will soon have a new bus company because of a recent federal antitrust settlement.

Masssachusetts Attorney General Martha Coakley's Office, along with 10 other state Attorneys General, settled a case involving an antitrust challenge to the merger of the two largest school bus operators in the United States, FirstGroup - which operates as First Student - and Laidlaw International, Inc., on Sept. 26.

The multi-state settlement requires that FirstGroup sell the regular school bus transportation contracts and all related assets, including the school buses, bus depot, repair and maintenance facilities, and local offices currently used to provide services under contracts.

Ashburnham-Westminster School District's Business Administrator Sherry Kersey said despite this sale everything for the school district and the students should remain the same. She said the bid contract is supposed to be sold in its entirety so all of the employees, bus routes, costs and penalties will remain the same.

"This is supposed to protect us," she said.

If the bus company does not sell off the contract, then a trustee could be hired to help in the process or the AG's office could take other steps to ensure the competition, Breton said.

"Under the settlement, FirstGroup is required to fulfill the existing contracts until they are divested," said Amie Breton, a spokesperson for Coakley's office. "The company (or companies) that ultimately take over the contracts have to be approved by the Attorney General's Office. First- Group and that company have to provide us with whatever information we may need to make the determination that the proposed company is reputable and will be the best competitive option."

In February 2007, FirstGroup and Laidlaw announced their intention to merge, and the proposed transaction was reviewed by the Department of Justice's Antitrust Division along with Massachusetts and the 10 other states.

"We believe this settlement will help preserve a competitive school bus operator market in Massachusetts, and by doing so, keep down transportation costs for school districts and taxpayers," said Coakley in a press release.

The Attorney General's investigation found that on Cape Cod, in parts of Plymouth and Bristol Counties, North Central Worcester County, and in Boston, First- Group and Laidlaw controlled almost all of the regular school bus transportation contracts, and have been the only companies bidding on those contracts for an extended period of time.

FirstStudent and Laidlaw were the only two companies that bid on the transportation contract for the Ashburnham-Westminster School District in December 2006, when the contract for July 2007 to July 2012 was issued.

Laidlaw's bid, which the school district signed, was $1,377,360 for the first year of the contract, which 2.7 percent increases for the second and third year of the contract. The contract also includes an optional fourth and fifth year, with a 5 percent increase in cost.

FirstStudent's bid was $1,561,158 for the first year with a 2.9 percent increase for the second and third year of the bid.

FirstStudent held the school district's contract for the previous five ears, after coming in as the low bidder in 2002.

The settlement is designed to preserve competition in specific regions of Massachusetts that would be most harmed by the merger, according to the press release.

The settlement filed in the Federal District Court in Boston requires FirstGroup and Laidlaw to sell nine of their school bus transportation contracts on Cape Cod, the South Shore, and Northern Worcester County to another school bus operator approved by the school districts and the Attorney General.

"After the merger, FirstGroup would control all of these contracts and face little or no competition the next time the school districts put the contracts out to bid," according to the AG's press release. "With no competition, and only FirstGroup likely to bid, the school districts faced inflated bids and substantially increased transportation costs - over and above the natural price increases due to increases in gasoline and driver costs. (The) settlement is designed to ensure competition for these school bus contracts in the future."

The other states, which also opposed the merger, were Alaska, California, Connecticut, Illinois, Maine, Minnesota, Missouri, New Jersey, Rhode Island and Washington.