what about where there is a long standing commercial service from A to B via C and a competitor registers and then later deregisters a service from A to C or C to B... can the council then put out a tender to replace the deregistered service (especially if that service runs at similar times to the original commercial service)?
I'm not quite sure I understand the question, but...
If new commercial service got withdrawn and old commercial service was still there, council would probably take the view that what was there to start with was quite adequate thanks all the same.
If old commercial service got withdrawn, and new commercial service didn't cover all the ground, then council might do something to try and fill those gaps.
If there was an existing commercial service which then had commercial competition, and the end result was both operators withdrawing, then council would probably feel a need to do something.
Another thing that has happened occasionally is that operators have started new and speculative commercial services, then withdrawn them after a short while in the hope that council will tender for a replacement service. Especially when money is tight, councils are reluctant to get drawn in to that sort of thing.
There is no legal definition of what sort of bus services councils should procure to meet gaps in the commercial market. It's for individual councils to decide what its policies are and what sort of services it considers "socially necessary", and then to go about procuring those services in accordance with EU and national law about procuring things in general / procuring local bus services in particular.
Then there's the question of whether they have the finances to provide all the services they would like to provide, and setting policies to decide how they will prioritise what services to provide.
ETA - There is a DfT document "Tendering road passenger transport contracts: best practice guidance" which is a bit more user friendly than trawling through chunks of law (and bear in mind that if you find an original of the 1985 Act, that won't tell you what bits have been modified or repealed by subsequent law) but it's still 89 pages -
link