OFT reasons for referring Greater Western rail franchise bids

Full text (19 pages, PDF) of the Office of Fair Trading's decision to refer Stagecoach's bid for the Greater Western passenger rail franchise to a Competition Commission merger inquiry. The OFT has also released its reasons for referring the Firstgroup (14 pages, PDF) and National Express (14 pages, PDF) bids.

In these decisions, and as in other recent railway merger cases, much of the OFT's reasoning is framed in terms of "theories of harm" and of "incentives" for firms to engage in particular conduct after the merger, rather than on the basis of a direct consideration of competitive constraints and the proposed merger's effect on these constraints. The OFT's analysis draws on the Competition Commission report on Firstgroup/Scotrail (where such incentive analysis was used to identify the flows on which particular kinds of behavioural remedies would be imposed), but neither these decisions nor the OFT's published guidance (72 pages, PDF) or guidance amendment (2 pages, PDF) appear to explain how theories of harm can be used to judge whether the statutory test for making a merger reference is met when the option of accepting undertakings in lieu has been rejected outright.

For further information or advice please contact Franck Latrémolière.

Filed under Merger control, OFT, Public transport.

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