**Stagecoach To Work With UK Competition Regulator On East Coast Concerns**
LONDON (Alliance News) – Bus and rail operator Stagecoach Group PLC Friday said it will work with the UK competition regulator to resolve anti-trust concerns that the regulator raised over its recent win of the East Coast Main Line rail franchise.
Inter City Railways, a joint venture between Stagecoach and Virgin Trains, was awarded the franchise for the East Coast Main Line back in November by the UK government. Stagecoach holds 90% of the share capital of Inter City Railways, with Virgin holding the remaining 10%.
Antitrust regulator Competition and Markets Authority is required by law to carry out a “phase 1” review of all UK rail franchise awards.
In a statement Friday, the CMA said that Inter City Railways has the chance to avoid an “in-depth merger investigation” into its successful bid to run the East Coast rail franchise, if it can offer an acceptable solution to address competition concerns.
The CMA said it found that the franchise award did not raise significant concerns in most areas, but could potentially reduce competition on certain routes, including the overlap of East Coast rail services with East Midland Trains services operated by Stagecoach between Peterborough and Grantham and between Peterborough and Lincoln. It is also concerned about an overlap of rail services with Citylink’s coach services, which are operated and jointly owned by Stagecoach, between Edinburgh and Dundee as well as between Edinburgh and Aberdeen.
“The CMA in its phase 1 investigation found that there is a realistic prospect that the award of the East Coast rail franchise to Inter City Railways would lead to higher fares or reduced service quality for rail passengers travelling on these overlapping routes,” the CMA said.
“In addition, the CMA was concerned that the award to Inter City Railways may result in higher coach fares or reduced coach services quality, including a reduction in frequency, on these overlapping coach and rail services routes, given that coach services are unregulated,” it added.
In a statement Friday afternoon, Stagecoach said it notes that the CMA has identified “limited issues”.
“The company will study the detail of the CMA’s review decision and work constructively with the authority to address the issues raised with a view to running services under the Virgin Trains East Coast brand as planned from 1 March 2015,” the company said.
Stagecoach shares were trading 1.0% lower Friday afternoon at 340.45 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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