Clearance of Stagecoach / East Midlands Trains
OFT decision (25 pages, PDF) to clear the award of the East Midlands Trains passenger rail franchise (essentially the former Midland Mainline business) to Stagecoach under the GB passenger rail franchise merger control rules.
As in the cases of Arriva Cross Country and National Express East Coast, the clearance was on the grounds that the markets in which there might be a substantial lessening of competition were not of sufficient importance in the OFT's view to warrant a Competition Commission inquiry.
The markets in question are identified (using what seems to have been a significant amount of survey and quantitative work by Stagecoach) as the Luton-Bedford, Worksop-Whitwell, Worksop-Creswell and Chesterfield-Sheffield passenger flows, which are served primarily by Stagecoach buses and East Midlands Trains.
The OFT's reasons for considering a Competition Commission inquiry to be unjustified include:
- A view that there would be no wholly satisfactory remedy available.
- A view that rail franchise awards are not like normal mergers: “While by no means sufficient to remove any competition concerns in principle, the degree of regulation and other sui generis features of rail franchise awards relative to general private mergers and acquisitions activity do place limits on the scale and durability of merger effects on overlap flows – especially with respect to rail services – that are not applicable more generally”.
- The total turnover of less than £3 million a year in the potentially relevant markets.
For further information or advice please contact Franck Latrémolière.
Filed under Merger control, OFT, Rail & bus.
