03.11.16
Arriva to cap fares on three Northern routes due to ‘lessened competition’
The Competition and Market Authority (CMA) has found that the award of the Northern Rail franchise to Arriva will not lead to competition concerns except on three services, ending an investigation that began in January of this year.
The CMA examined over 1,235 passenger flows and decided that the award of the franchise does not raise competition considerations in 99.8% of cases in which Northern services overlap with other bus and rail services run by Arriva, such as Arriva Trains Wales and Grand Central.
However, the CMA found a substantial lessening of competition (SLC) on three routes – Leeds to Sheffield, Wakefield to Sheffield and Chester to Manchester – where the choice of operators had been removed, potentially leading to higher fares for passengers. The authority has therefore decided to cap unregulated fares on these routes.
The chair of the inquiry, Phil Evans, said: “We have found that Arriva’s acquisition of the Northern rail franchise will not lead to competition concerns on the vast majority of routes on which Arriva operates overlapping rail services.
“However, we have found three routes where Arriva could raise unregulated fares for passengers. In order to protect their interests, we are bringing in targeted price caps on the affected journeys, which will still allow Arriva to deliver its overall commitment to bring a range of benefits to passengers through the Northern rail franchise, such as better trains and improved customer service.”
Arriva Rail North was awarded the Northern franchise by the DfT in December 2015 following a competitive tender and began operating the franchise in April of this year. The terms were agreed with the CMA with a commitment to delivering the above benefits to passengers over the nine-year agreement.
The CMA’s initial investigation began in January 2016 before the merger was referred for a phase 2 investigation back in May. On 9 September 2016, the CMA published its provisional findings where it first revealed the local routes on which Arriva’s monopoly was a cause for concern.
Commenting on the publication of the final decision, Chris Burchell, managing director of Arriva UK Trains, said: “We’re very pleased that the CMA has taken on board our representations. We have consistently maintained throughout this process that the operation of the Northern franchise by Arriva alongside our existing bus and rail businesses doesn’t lead to a lessening of competition, and we welcome that the CMA has found there isn’t a concern in the overwhelming majority of instances.
“We will now continue to constructively address the final points raised to agree acceptable solutions with the CMA for the handful of issues identified on the remaining passenger flows,” he added.
Burchell showed his pleasure that the CMA recognised Arriva’s pledge to passengers and offered his reassurance that Arriva remain ‘fully committed’ to delivering these plans for the benefit of all of its customers across the north.
"We fully support the very important task of ensuring competition for the benefit of consumers,” Burchell said. “With the conclusion of this process, we believe that it is now an appropriate time to review how this process is applied to the award of future rail franchises.”
(Image c. Alvey and Towers)
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