East Coast urged to address competition concerns

The CMA has warned East Coast that it faces an in-depth investigation if it does not address competition concerns.

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By :  ,  Financial Analyst

The Competition and Markets Authority (CMA) has warned the consortium that will operate East Coast rail services that it could face an in-depth investigation.

Members of the CMA have raised concerns about the level of competition once Inter City Railways (ICRL), owned by Stagecoach and Virgin Trains, take over the route. The government department has highlighted a number of lines where some East Coast service overlap with a small number of Stagecoach or Virgin coach or rail services.

The CMA noted that the East Coast and East Midland Trains services overlapped between Peterborough and Grantham and between Peterborough and Lincoln. While in Scotland there was a similar situation between Edinburgh and Dundee and between Edinburgh and Aberdeen which could impact on the coach services provided by Citylink.

There are concerns that this competition could result in a poorer service and high fares for passengers. CMA officials confirmed that IRCL is now being given the opportunity to resolve any competition concerns raised by the organisation. A verdict will be delivered by the CMA on February 20th.

Andrea Coscelli, CMA executive director of markets and mergers, said: "ICRL can now offer a resolution to these concerns to avoid the [franchise] award being referred for an in-depth phase 2 investigation."

A change in UK railways

IRCL was awarded the contract for the East Coast main line in November 2014. Under the terms of the £3.3 billion contract, the consortium promised to invest £140 million in the key route over the next eight years. It brought an end to public ownership of the line, prompting dismay among railway unions.

The consortium will officially take over the route on March 1st. It wants to introduce 23 new services to and from London adding an extra 3,100 seats for passengers during the morning peak times by 2020. While IRCL is 90 per cent owned by Stagecoach, the trains will carry the brand of 'Virgin Trains East Coast' once they are rolled out next month.

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