Latest Rail News

09.02.15

New East Coast operator faces probe by competition watchdog

The consortium of Stagecoach and Virgin Trains that will operate East Coast rail services has been ordered to address competition concerns or face an in-depth investigation by the Competition and Markets Authority (CMA).

Inter City Railways Ltd (ICRL), a subsidiary jointly owned by Stagecoach and Virgin Trains, takes over the East Coast franchise on 1 March, but the CMA is concerned about their market share on certain sections of the London-Scotland route.

Specifically the CMA cites the overlap of East Coast rail services with East Midland Trains services operated by Stagecoach between Peterborough and Grantham and between Peterborough and Lincoln. Neither route has any other rail operator, with only a minimal coach service as an alternative.

The CMA is also concerned about the overlap of East Coast rail services with Citylink’s coach services, which are operated and jointly owned by Stagecoach, between Edinburgh and Dundee as well as between Edinburgh and Aberdeen. The only competing public transport services are provided by ScotRail and Arriva CrossCountry.

The watchdog believes there is “a realistic prospect that the award of the East Coast franchise to ICRL would lead to higher fares or reduced service quality for rail passengers travelling on these overlapping routes”.

ICRL, which will be branded as Virgin Trains East Coast, now has the opportunity to offer undertakings to resolve the competition concerns identified by the CMA within five working days. The CMA has until 20 February to decide whether these might be acceptable as a suitable remedy.

If the efforts by Stagecoach and Virgin do not assuage the fears of the CMA then a further investigation will be ordered.

Andrea Coscelli, executive director, markets and mergers, and decision maker in this case, said: “Our investigation has shown that no significant competition concerns arise on most routes where East Coast services overlap with existing Stagecoach or Virgin Trains rail or coach services. However, we found that the award could give rise to higher fares or reduced service quality for rail passengers travelling between Peterborough, Grantham and Lincoln and for coach and rail passengers travelling between Edinburgh, Dundee and Aberdeen, in some cases possibly affecting thousands of consumers relying on public transport services. ICRL can now offer a resolution to these concerns to avoid the award being referred for an in-depth phase 2 investigation.”

If the CMA takes further action against Stagecoach and Virgin it could prove to be embarrassing to the government, which faced heavy criticism for re-privatising the franchise after it had been operated successfully by the state-owned Directly Operated Railways.

The Department for Transport said: “We are confident that this franchise gives the best deal for passengers. It will provide more seats, more services, new trains and over £140m of investment along the route. In addition, more than £3bn will be paid to taxpayers

“Stagecoach/Virgin will take over responsibility for the franchise on 1 March as planned. They are now working to address the CMA’s concerns. It would not be appropriate to comment further while the CMA’s review is ongoing.”

Stagecoach told the Financial Times the competition authority had identified “limited issues”. The company would “work constructively with the authority to address the issues raised with a view to running services…as planned”.

(Image source: Mike Knell)

Tell us what you think – have your say below, or email us directly at opinion@railtechnologymagazine.com

Comments

Al   09/02/2015 at 14:17

Although I understand their comments, originally when DfT wrongly gave the West Coast to First there was no investigation into the monopoly that First would have had through West Coast, Scotrail and Transpennine Express. Meaning if you wanted to get anywhere around Scotland, NW England and London you'd only have First as the option. Because of this I can't help but think this is just an excuse to get at Virgin again!

Add your comment

 

related

Rail industry Focus

View all News

Comment

RIA welcomes new report of EU rail supply competitiveness

22/10/2019RIA welcomes new report of EU rail supply competitiveness

The UK Rail Industry Association (RIA) has welcomed a new report on the EU rail supply industry as an “important step forward” in dev... more >
The challenge of completing Crossrail

05/07/2019The challenge of completing Crossrail

With a new plan now in place to deliver Crossrail, Hedley Ayres, National Audit Office manager, major projects and programmes, takes a look at ho... more >

'the sleepers' blog

NPR, TRU & Fleetwood Mac

18/10/2019NPR, TRU & Fleetwood Mac

Switch up your playlist with the first #WeAreRTM podcast, gain exclusive insight into the leaders running the rail industry their opinions on recent headlines, visions for the future and meet the personalities behind the job titles. It's no... more >
read more blog posts from 'the sleeper' >

Interviews

Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

24/06/2019Andrew Haines, CE of Network Rail, tells BBC News his organisation could issue future rail franchises

Andrew Haines, the Chief Executive of Network Rail, has told the Today programme on Radio 4's BBC’s flagship news programme that he would not rule out his organisation issuing future r... more >
Malcolm Holmes, executive director of West Midlands Rail Executive, announced as TCR Midlands speaker in Birmingham

24/06/2019Malcolm Holmes, executive director of West Midlands Rail Executive, announced as TCR Midlands speaker in Birmingham

Ahead of his appearance, Malcolm Holmes spoke with Rail Technology Magazine about what key leaders in the industry were doing to improve rail in the Midlands. He said: “It’s very... more >