CMA flags FirstGroup involvement in West Coast franchise

Following the award of the franchise to a joint venture of FTSE 250 passenger transport operator FirstGroup and Italian state railway Trenitalia, the competition watchdog said it launched an initial phase 1 investigation, and found competition concerns relating to 21 routes.

It said 17 of those were between Preston and Scotland, terminating at Glasgow or Edinburgh, and four were between Oxenholme and Carlisle.

The concerns arose because passengers would only be able to choose from West Coast Rail – operated as a joint venture between FirstGroup and Trenitalia - for 17 routes, or TransPennine Express, operated solely by FirstGroup.

On the four remaining routes, passengers would only be able to choose from three operators in total - West Coast Rail, TransPennine Express and one other operator.

“The CMA 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,” the regulator said in its statement.

“The companies now have the opportunity to offer methods to address the CMA’s concerns.”

The CMA noted that in previous cases, such as the award of the East Midlands Rail franchise to Abellio, and FirstGroup and MTR’s joint venture on the South Western franchise, the CMA’s concerns were resolved by the companies agreeing to price caps on affected lines.

“However, should any proposals offered be considered insufficient by the CMA, a more in-depth phase 2 investigation will be conducted.”

The CMA’s decision was in advance of the start of the franchise, which is due to begin on 8 December.

At 1145 GMT, shares in FirstGroup were up 0.31% at 128.1p.