CMA clears TransPennine Express rail franchise award
The CMA has cleared the award of the TransPennine Express rail franchise to First TransPennine Express Limited, a subsidiary of FirstGroup.
The franchise, which provides inter-urban services in the north of England, offering direct connections between cities including Leeds, Liverpool, Manchester, Newcastle and Sheffield, as well as cross-border routes from the north-west of England to Scotland, was awarded to First TransPennine Express Limited by the Department for Transport in December 2015.
The Competition and Markets Authority (CMA) examined overlaps with other rail services and determined that the franchise does not give rise to a realistic prospect of a substantial lessening of competition (SLC). This is primarily because of the competition provided by Northern Rail on the line between Selby and Hull.
The CMA also considered whether the award could reduce the number of bidders for future rail franchises, or provide an advantage to FirstGroup the next time the franchise is awarded, but it did not regard either as a realistic prospect.
In relation to competition between rail and bus services, the CMA could not rule out the possibility that the franchise award may result in an SLC between Huddersfield and Marsden as combining its bus services with the franchise would give FirstGroup a very high share of public transport services. However, it has exercised its discretion to apply the ‘de minimis’ exception where small markets are affected, and therefore has not referred the franchise award for an in-depth investigation.
All other information relating to this investigation can be found on the case page.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on mergers cases.
- The Reference Test: under the Enterprise Act 2002 the CMA has a duty to make a reference to phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in an SLC within any market or markets in the United Kingdom for goods or services.
- Where the CMA’s duty to refer is engaged, the CMA may, pursuant to section 33(2)(a) of the Enterprise Act 2002, decide not to refer the merger under investigation for a phase 2 investigation on the basis that the markets concerned are not of sufficient importance to justify the making of a reference. This is known as the ‘de minimis’ exception. In considering whether to apply the ‘de minimis’ exception, the CMA considers, in broad terms, whether the costs involved in a reference would be disproportionate to the size of the market(s) concerned, taking into account also other factors, such as the likelihood that harm will arise, the magnitude of competition potentially lost and the duration of such effects.
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