Earlier this year, the Department for Transport awarded the South
Western rail franchise to FirstGroup and MTR. FirstGroup already
operates Great Western Railway (GWR), which runs the only other
train service between London and Exeter.
An initial merger
investigation by the Competition and Markets Authority
(CMA)
raised concerns this could reduce competition on the
London–Exeter route, leading to higher fares or worse service for
passengers.
In July the CMA announced it
would consider an offer (‘undertakings’) proposed by FirstGroup
and MTR aimed at addressing these concerns.
The offer made by the 2 companies involves a price cap on
unregulated fares between London and Exeter on both South Western
and GWR services. Ticket prices
on the route will be linked to those on a number of other
comparable services to ensure they are kept in line with the
market.
The companies have also offered to maintain the availability of
cheaper advance fares on both services, again by linking them
with similar routes.
The CMA consulted
publicly on the proposals, which it has now accepted.
FirstGroup and MTR will be required to submit regular reports to
the CMA to show they
are complying with the agreement.
The acceptance of these proposals by the CMA means that
the award of the franchise will go ahead without the deal being
referred for a more in-depth ‘phase 2’ investigation.
All other information relating to this investigation can be found
on the case page. The final
undertakings will be published shortly.
Rachel Merelie, Executive Director of Markets and Mergers, said:
We examined the proposals very thoroughly during the
consultation period to ensure that they addressed all of our
concerns. We believe that they will protect passengers from
fares being pushed up due to lack of competition on this key
route between London and Exeter.
