The order to sell Preston Bus, which was acquired by Stagecoach in January this year after a period of what have been described widely as “bus wars” between the pair in the Lancashire town, prompted a furious reaction from the Perth-based bus and rail company when it was announced yesterday.

While Stagecoach has been no stranger to battles with the UK competition authorities over the years, the outcome of these various investigations has tended to be much less dramatic than that of the latest inquiry.

Alternative remedies, such as behavioural undertakings on fares, service frequency or profits, or a disposal of parts of the business, were open to the Commission but it decided these would not be effective in addressing a “substantial lessening of competition” resulting from Stagecoach’s acquisition of Preston Bus.

Orders for the sale of entire operating units, of the type issued yesterday, have tended to be uncommon.

The Competition Commission said yesterday it would, following the sale of Preston Bus, consider time-limited restrictions on Stagecoach’s activities as they affect competition with the divested business, lasting no longer than 12 months, if it could be demonstrated this was necessary to allow a competitor to become established.

Stagecoach is believed to be looking seriously at appealing the order to sell Preston Bus to the Competition Appeal Tribunal, the specialist judicial body established to hear and decide cases involving competition or economic regulatory issues.

A Stagecoach spokesman said: “We fundamentally disagree with the Competition Commission’s decision. It is a perverse and irrational contradiction of competition law and common sense.”

The Competition Commission declared in September that Stagecoach’s acquisition of Preston Bus, which at the time had about 300 employees and 120 vehicles, would reduce competition and could harm passengers’ interests.

It reiterated its view yesterday that the employee owners of Preston Bus had been left with “little choice” but to sell out to Stagecoach, after the Scottish company moved to operate routes in direct competition at a heavy loss.

The Competition Commission has noted that Stagecoach initiated these loss-making services after Preston Bus rejected a formal takeover approach from the Scottish company in the summer of 2006.

The financial health of Preston Bus “deteriorated rapidly” from June 2007, after Stagecoach began operating loss-making services on the then employee-owned company’s routes, the Competition Commission said.

The previously-profitable Preston Bus was, in the words of the Competition Commission, in “severe financial difficulties” by September 2008.

Stagecoach signed an agreement to buy Preston Bus in December 2008, and this deal was completed in January 2009.

Stagecoach’s acquisition of Preston Bus was referred by the Office of Fair Trading for a Competition Commission investigation in May.

The Stagecoach spokesman told The Herald in May that the throwing of eggs by two Stagecoach employees at Preston Bus vehicles in summer 2007, at the height of the bus wars, was one of a few “isolated incidents”. He said such behaviour “certainly was not endorsed” by Stagecoach.

In the 1990s, Stagecoach had repeated run-ins with UK competition authorities.

By far the highest-profile was in August 1995, when Stagecoach was accused of “predatory and deplorable’’ actions by the Monopolies and Mergers Commission in a report in which the MMC blamed the Perth-based group for the final collapse of a municipal bus company in Darlington. In contrast to the Preston Bus case, the competition authorities dealt with the Darlington issue by seeking behavioural undertakings from Stagecoach on bus fares and frequencies.

In its final report on Preston Bus yesterday, the Competition Commission said: “We found that the sequence of events that concluded with the acquisition of PBL (Preston Bus Limited) by Stagecoach began in 2006. Shortly after a meeting between Stagecoach and PBL in July 2006 at which PBL rejected Stagecoach’s expression of interest in an acquisition of PBL, Stagecoach developed a plan for expansion in the Preston area and less than one year later launched a number of intra-urban services in direct competition with PBL.

“This expansion had a number of characteristics which have caused us to conclude that it was not driven by normal commercial considerations and that conditions of competition in the period preceding the merger were accordingly abnormal.”

It added: “Most notably, between the date of their launch in June 2007 and the acquisition, Stagecoach’s intra-urban services in Preston suffered considerable losses, which were not compensated for by profits elsewhere in its Preston operation. PBL’s financial position deteriorated rapidly in the months that followed.”

The Commission noted Preston Bus was profitable until June 2007, with annual profits averaging £157,000 in the four years to March 2007.

The Commission looked back to late 2006 and early 2007 in assessing what the competitive situation would be like had the acquisition of Preston Bus not occurred. This period, it stated, preceded the period of “abnormal competition” which followed between Preston Bus and Stagecoach, which had substantial longstanding operations in and around the Lancashire town. Stagecoach had argued the relevant period was that immediately before its purchase of Preston Bus.

The Stagecoach spokesman said: “The Commission decision is to restore a failed monopoly provider of local bus services and reverse the results of legitimate competition, which it is supposed to uphold. This decision risks setting a dangerous precedent for all sectors of the economy.”