20.02.08
Rolling stock market investigation-emerging thinking
The Competition Commission has published the latest document as part of its investigation into the market for the leasing of rolling stock for franchised passenger services and related maintenance services in Great Britain.
The 'emerging thinking' document sets out the CC's current view on competition in the rolling stock market on the basis of evidence analysed to date, as well as identifying areas where it is seeking additional evidence and the issues on which it intends to concentrate in the period prior to the planned publication of its provisional findings in May.
The Office of Rail Regulation referred the rolling stock market for investigation by the CC in April 2007. The CC is now carrying out its own comprehensive investigation, to see if any features of this market prevent, restrict or distort competition and, if so, what action might be taken to remedy the position.
The full emerging thinking document is available on the CC website, eight working papers addressing in greater detail issues covered in the main document will be published later this week. The CC has not yet reached any conclusions on the issues discussed in any of the documents. The purpose of the document is to demonstrate the CC's current thinking on the issues and to invite further evidence from parties in relation to these matters.
Chairman of the Rolling Stock inquiry group, Diana Guy said:
”The main focus in our inquiry so far has been on the markets for used, rather than new, rolling stock. The specific requirements of each franchise means that train operating companies often have few or no alternatives to leasing the incumbent rolling stock when they bid for a franchise. There is a shortage of alternative rolling stock that is both available and suitable.
In a situation where customers have few alternatives, then there is a possibility that prices could be higher than those in a well-functioning market. As part of our consideration of this issue we will be carrying out a detailed analysis of the rolling stock companies' profitability.
It has been suggested to us that the franchising system operated by the Department for Transport (DfT) is too prescriptive and can have the effect of restricting competition, by giving train operating companies little choice of which rolling stock to use. Whilst we realize that the DfT has reasons for its current approach, we will need to examine how this may affect competition.
We have yet to come to any conclusions in this inquiry and there are several areas, including the role of maintenance, where we have further work to do. The purpose of the 'emerging thinking' document is to update parties on our progress with this inquiry and give them the chance to respond to our thinking so far.”
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