Authority raises competition concerns over Stagecoach and Virgin's East Coast bid

Stagecoach and Virgin Trains have been told to address concerns raised by the Competition and Markets Authority that their control of the East Coast rail franchise would mean less competition to the detriment of passengers.

The authority found that there is "a realistic prospect that the award of the franchise to Inter City Railways Ltd [the Stagecoach-Virgin company] would lead to higher fares or reduced service quality for rail passengers travelling on overlapping routes" including between Peterborough and Grantham, Peterborough and Lincoln and Edinburgh and Aberdeen. In the first two cases there is no other rail operator and only a minimal coach service.

The CMA is concerned that the award could lead to higher coach fares or a reduction in coach frequency given that coach services are unregulated. But it found that competition between the West Coast and East Coast services, both operated by consortia of Stagecoach and Virgin Trains, is "limited" and air services provide "significant rivalry".

The ICRL now has five working days to resolve these concerns and the CMA will then make its final decision on whether a more in-depth investigation into the concerns is required. This would still allow the ICRL to start operating services in March, but the CMA could impose a 'hold-separate' order aimed at preventing any integration of businesses while its investigation is carried out.