CMA raises competition concerns on flagship franchise

 

The new West Coast rail franchise, which is due to begin next month, could have competition restrictions placed on it after regulators raised concerns.

The Competition and Markets Authority (CMA), which is responsible for examining whether competition issues arise from new rail franchises, has been looking into the award of West Coast Rail (WCR) to a joint venture between FirstGroup and Trenitalia.

”Local
Lancaster, on the route between Preston and Scotland

It said that following its initial Phase 1 investigation it has found 'competition concerns' relating to 21 routes, of which 17 are between Preston and Glasgow or Edinburgh and four between Oxenholme and Carlisle.

The CMA explained that the competition issues arise because on 17 routes passengers will only be able to choose from West Coast Rail, in which FirstGroup is a partner, and TransPennine Express, operated solely by FirstGroup.

On the four remaining routes, passengers can only choose from 3 operators in total: West Coast Rail, TransPennine Express and one other operator.

The CMA said it is concerned this could lead to higher fares and less availability of cheaper tickets because train passengers would have no alternatives, or limited options, to choose from.

It pointed out that its decision comes in advance of the start of the franchise, due to commence on 8 December.

Under the new-style franchise, the new 'West Coast Partnership (WCP)' will deliver intercity services on the West Coast Mainline and 'develop and launch' HS2 services, which are due to begin from 2026.

The CMA said the companies now have ‘the opportunity to offer methods to address the concerns’.

It added that in previous cases, such as the award of the East Midlands Rail franchise to Abellio and FirstGroup and MTR’s acquisition of South Western, its concerns were resolved by the companies agreeing to price caps on affected lines.

It added however that if it considered any proposals offered to be insufficient, a 'more in-depth Phase 2 investigation' will be conducted.

If this investigation is not concluded before the franchise is due to begin, the CMA can impose interim measures, but these should not prevent the franchise contract being honoured.

Transport Network understands that these measures would effectively place a freeze on changes under the new franchise.

A FirstGroup spokesperson said: 'We have been discussing our plans for the new West Coast Partnership franchise with the CMA for several months and we are pleased that on the vast majority of routes, it has found no competition issues.

'Now that this update gives more clarity, we look forward to submitting our proposals which we envisage will satisfy their concerns.'

 

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