The CMA has accepted undertakings offered by Stagecoach to remedy competition concerns over the award of the InterCity East Coast rail franchise.
On 20 February 2015, the Competition and Markets Authority (CMA) announced it would consider in detail undertakings proposed by Stagecoach Group plc (Stagecoach) instead of referring the award of the InterCity East Coast (ICEC) franchise to Inter City Railways Limited, a subsidiary of Stagecoach and Virgin Group Holdings Limited, for an in-depth phase 2 merger investigation.
The undertakings offered by Stagecoach on rail journeys that the CMA found give rise to competition concerns (Peterborough–Grantham and Peterborough–Lincoln), commit it to a price cap on certain fares set by Stagecoach’s East Midlands Trains and on ICEC – and provide for the ongoing monitoring of such rail fares by the CMA.
In relation to Citylink coach services (where the CMA found competition concerns over the Edinburgh–Dundee and Edinburgh–Aberdeen routes in view of Stagecoach’s stake in Citylink), the undertakings require that decisions which may impact the competitiveness of these coach services against ICEC on these journeys will be taken by Stagecoach’s joint venture partner, ComfortDelGro, instead of Stagecoach. These decisions relate to fares, timetables, frequency and service quality.
Fare decisions relating to seats sold through Stagecoach’s megabus.com website will also be subject to scrutiny by ComfortDelGro, which may require Citylink management to adopt a different pricing policy for fares sold through megabus.com.
As a result of the CMA’s acceptance of these undertakings, the award of the franchise will not now be referred for an in-depth phase 2 investigation.
Before accepting the undertakings, the CMA carefully assessed and consulted publicly on the proposed undertakings. It received one submission from a third party which led to modification of the undertakings by Stagecoach in order to provide a more effective and clear clear-cut remedy.
The undertakings and all other information relating to this investigation can be found on the case page.