Affected market: Rail franchise
The OFT's decision on reference under section 33(1) given on 21
Great North Eastern Railway Limited (GNER) operates the InterCity
East Coast (ICEC) rail franchise on behalf of its parent company GNER
Holdings Limited (GNER Holdings) which is the current ICEC franchisee.
The franchise ends on 1 May 2005. In the 52 weeks to 4 January 2004,
GNER's UK turnover was £429,083,000.
InterCity East Coast Franchise (ICEC) operates long distance high
speed passenger rail transport services linking London with parts of
East Anglia, East Midlands, Yorkshire, northeast England and Scotland.
As stated above, it is currently operated by GNER and its turnover for
the 52 weeks ended 4 January 2004 was £429,083,000 (see [note
GNER has submitted a bid to the Strategic Rail Authority (SRA) to
operate the ICEC franchise commencing on 1 May 2005. The entry into a
franchise agreement will, pursuant to section 66(3) of the Railways Act
1993, constitute an acquisition of control leading to the ICEC franchise
business and the business of GNER ceasing to be distinct.
A satisfactory notification was submitted on 31 October 2004 and the 40
working day administrative deadline is 24 December 2004.
The anticipated merger arises from a competition for the award of the
ICEC franchise commencing on 1 May 2005. In May 2004, the SRA announced
that four parties, one of which is GNER, had successfully pre-qualified
as bidders for the franchise. The other pre-qualified bidders are:
Danish Railways (DSB) and First London, Scottish and North East Railway
Ltd (First Group plc), and InterCity Railways Limited
(Virgin/Stagecoach). The SRA issued an Invitation to Tender to the
pre-qualified bidders on 6 October 2004 and is expected to announce its
preferred bid in February 2005.
As a result of this transaction the businesses controlled by GNER and
the ICEC franchise will cease to be distinct. The UK turnover of the
ICEC franchise exceeds £70 million, so the turnover test in section
23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT
therefore believes that it is or may be the case that arrangements are
in progress or in contemplation which, if carried into effect, will
result in the creation of a relevant merger situation.
The parties do not overlap in the supply of any good or service. GNER's
ultimate parent company, Sea Containers Limited (see [note 2],
operates cross-Channel ferry services between England and France and
charters special train services for on-board holidays and excursions in
the UK. These services are considered to be entirely distinct from, and
therefore do not compete with, the ICEC's scheduled rail passenger
THIRD PARTY VIEWS
No third parties expressed concerns.
No overlaps or vertical competition issues are created by the merger.
Consequently, the OFT does not believe that it is or may be the case
that the merger may be expected to result in a substantial lessening of
competition within a market or markets in the United Kingdom.
This merger will therefore not be referred to the Competition Commission
under section 33(1) of the Act.
- The correct date is 3 January 2004.
- The correct name is Sea Containers Ltd.