Transport group given go-ahead for Scotrail bid

The competition watchdog in England gave transport operator First Group the green light today to press ahead with its bid for Scotrail.

The Competition Commission said it had found that a takeover of the Scottish rail franchise by First could result in a “substantial lessening of competition”.

But the commission said conditions could be imposed on First that would be likely to offset the disadvantages.

First, rival Arriva and current Scotrail operator National Express have all submitted bids for the franchise, which runs Scottish regional services and sleeper trains to London.

The Office of Fair Trading in England referred First’s bid to the commission amid concerns that First already has extensive bus operations in Scotland, particularly around Edinburgh and Glasgow.

The commission said First would not have to sell any of its bus operations to proceed with its rail bid, although “behavioural” remedies were likely to be necessary.

The company said today that it welcomed the commission’s findings and was due to meet commission officials to discuss potential remedies.

“First hopes it will be able to engage constructively with the commission to find a workable solution,” it said.

The commission said the "substantial lessening of competition'' caused by a First takeover of Scotrail could be expected to result in higher bus fares, poorer services and less choice for passengers on some bus routes, mainly in Glasgow and Edinburgh.

First would be able to introduce ticketing and bus information practices that would favour its own services against those of rivals, the commission said.

The company could cut bus frequencies, raise fares or change routes in order to move people from bus to rail.

The takeover would also create a large public transport network operator accounting for a large share of all revenues from public transport in Scotland, it added.

“This may be expected to give rise to adverse effects in wider public transport network markets,” the commission said.

Chairman of the commission inquiry group investigating the potential takeover, Professor Paul Geroski, said the group did not believe that improved competition would solve the problem.

However, he said the commission was consulting on ways to limit First’s ability to raise prices, cut service frequencies, change last and first bus times or launch other anti-competitive practices.

“The group would be willing to consider any practical alternative remedies, structural or behavioural, that First Group or others would like to propose,” Prof Geroski said.

First already runs the First Great Western, Transpennine Express and North Western rail franchises.

Its Great Western contract was recently extended and expanded to include Thames Trains services. In addition to Scotrail, it is bidding to take over the East Coast Main Line franchise from Great North Eastern Railway (GNER).

However, First lost out in its bid for the new Greater Anglia franchise, which was taken over by National Express on April 1.