Rail operator has 48 hours to mitigate competition concerns

The Competition and Markets Authority (CMA) has put a block in the way of the smooth running of Abellio’s planned takeover of the East Midlands rail franchise.

Abellio is scheduled to take control on August 18, having been awarded the franchise in April when current operator Stagecoach was banned from bidding.

But the CMA has today published an 8,500-word explanation for its decision, revealed last Friday, to further investigate competition concerns.

Abellio already operates the Greater Anglia, West Midlands Trains, and MerseyRail franchises. The CMA identified 41 direct overlaps and believes in two cases – Norwich to Ely and Thetford to Ely – there is “a realistic prospect of a substantial lessening of competition”.

The CMA believes that ” the closeness of competition between the overlapping services, the absence of other rail competitors on the flow, and the fact that the parties have both the ability and incentive to raise fares indicate that the Franchise Award gives rise to a realistic prospect of an SLC [substantial lessening of competition]”.

Abellio, through its vehicle Abellio East Midlands Ltd, has until Friday to offer an acceptable undertaking to the CMA.

The train operator is due to run the franchise for eight years from next month, and has promised to invest £600m in new trains and upgrades to stations.

A spokesman from Abellio said: “We will now work with the CMA to address their concerns on the Norwich to Ely and Ely to Thetford routes.”

In previous similar cases, such as the award of the Northern franchise to Arriva and FirstGroup and MTR’s acquisition of South Western, the CMA’s concerns were resolved by the operator agreeing to price-caps on the affected lines.