Competition and Markets Authority - Arriva and Northern Rail

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plcd1

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I did double check to see if this had been mentioned and couldn't see reference to it hence the posting.

Looks like the competition "wonks" at the CMA don't like the award of the Northern Rail franchise to Arriva.

https://www.gov.uk/government/news/arriva-could-face-in-depth-investigation-over-northern-rail-franchise

The Northern Rail franchise is currently the largest train franchise in Great Britain in terms of the number of services run. It operates over most rail routes in northern England.

Arriva Rail North Limited (ARN), a subsidiary of Arriva plc (Arriva), started operating the Northern Rail franchise on 1 April 2016, after being awarded the franchise by the Department for Transport last December. Arriva will continue to operate the franchise should the Competition and Markets Authority (CMA) decide to carry out an in-depth investigation; however, the CMA has issued an enforcement order which prevents full integration of the businesses until the CMA has concluded its investigation.

In addition to the Northern Rail franchise, Arriva currently operates 3 rail franchises, including Cross-Country Trains Limited and Arriva Trains Wales, two rail concessions and one open access rail service (with another one planned). Arriva’s existing rail services overlap with a number of journeys covered by the Northern Rail franchise. The CMA’s initial merger review has found that on 38 overlapping journeys there was little or no competition from other service providers and, as such, the CMA is concerned that any loss of competition between Arriva and the Northern Rail franchise could lead to higher prices or a reduction of service quality for passengers on these routes.

Arriva is also one of the largest bus operators in the UK, operating around 5,900 bus services in London and the South East of England, the North East, North West, as well as in the Midlands and Wales. There is a substantial overlap between Arriva’s network of bus services and the services offered under the Northern Rail franchise. The CMA found that the franchise award creates competition concerns in relation to these ‘bus-on-rail’ overlaps on 44 routes where there is limited or no competition from other bus or rail service providers, which could lead to higher prices or a reduction of service quality for affected passengers.

Arriva now has 5 working days to offer proposals to resolve the competition concerns identified by the CMA. If Arriva does not offer such undertakings, or the CMA does not accept them, the CMA will refer the Northern Rail franchise award for an in-depth phase 2 investigation.

Andrea Coscelli, Executive Director, Markets and Mergers, and decision-maker in the phase 1 case, said:

"Arriva already runs significant existing train and bus operations in the area covered by Northern Rail. We have identified a number of services and routes where passengers have previously had a choice between competing operators, but which will now be run by Arriva."

"This situation could potentially lead to a rise in non-regulated fares for passengers so unless Arriva is able to offer suitable undertakings now, we intend to carry out an in-depth investigation to look in more detail at these concerns, and decide whether any remedies are required."

The DfT plough through months of consultation and procurement activity and then the winning company mobilise and take over and then they get this! I'm amazed that Arriva apparently run 5 900 bus services in the UK. More likely 5 900 vehicles!

One to watch I think.
 
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HMS Ark Royal

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I did double check to see if this had been mentioned and couldn't see reference to it hence the posting.

Looks like the competition "wonks" at the CMA don't like the award of the Northern Rail franchise to Arriva.

https://www.gov.uk/government/news/arriva-could-face-in-depth-investigation-over-northern-rail-franchise



The DfT plough through months of consultation and procurement activity and then the winning company mobilise and take over and then they get this! I'm amazed that Arriva apparently run 5 900 bus services in the UK. More likely 5 900 vehicles!

One to watch I think.

If you lump outbound and in bound bus services then you'd get that number
 

talltim

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I don't get it. There are plenty of rail services in the UK where the franchise incumbent is a monopoly rail operator but this isn't an issue? Yet even if the same company runs bus and trains on the same route they aren't a transport monopoly, there are private cars (probably the major share in Northern areas), taxis, bikes, or even walking as other options.
 

eastwestdivide

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Anyone have additional info on the "38 overlapping journeys" referred to in the press release? Like where they are?
I trawled through the docs on the gov.uk page, but nothing there.
 

BestWestern

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Pointless wibble. First have had a near total public transport monopoly in Bristol and Bath for years, nobody has ever seemed at all bothered.
 

Iskra

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Anyone have additional info on the "38 overlapping journeys" referred to in the press release? Like where they are?
I trawled through the docs on the gov.uk page, but nothing there.

I don't know specifically but ATW and Northern routes overlap in places as do XC and Northern and GC and Northern.
 

LNW-GW Joint

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I don't know specifically but ATW and Northern routes overlap in places as do XC and Northern and GC and Northern.

I don't believe they are interested in rail overlaps, because that brings the whole franchising process into question.
All they are bothered about is local monopolies with bus and rail in the same ownership.
The similar VTEC/EMT issues relating to Stagecoach just resulted in very limited agreements to "ring fence" some local bus operations near Peterborough.
First had similar issues in parts of Scotland when they won Scotrail from National Express.
Arriva might have to make similar concessions on bus services around, say, Liverpool, but it won't have any significance for rail services.

That's assuming the CMA doesn't go on the warpath with DfT on a wider front.
The recent First Open Access ECML award does move in the direction the CMA wanted to see (and DfT didn't).
 

eastwestdivide

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Speculating on the "38 overlapping journeys", there are these obvious Northern/XC overlaps:
Chesterfield-Sheffield-Wakefield-Leeds-York
Chesterfield-Sheffield-Doncaster-York
Manchester-Stockport-Macclesfield-Stoke

And if you count 1 journey as a station pair, that already accounts for (fumbles for back of an envelope) something like 18 "journeys".

Then to a lesser extent, as this route as a whole is less well served by either franchise:
Darlington-Durham-Chester-le-Street-Newcastle-Morpeth
(very few Northern services S of Newcastle, 1 XC stopping at C-l-S)

Does that make sense?

The press release specifically says
Arriva’s existing rail services overlap with a number of journeys covered by the Northern Rail franchise
so they do appear to be interested in rail-rail overlaps, not just buses.
 
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LNW-GW Joint

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so they do appear to be interested in rail-rail overlaps, not just buses.

Manchester-Stoke is run by VT as well as XC/Northern. Similarly Manchester-Crewe with VT/ATW/Northern.
Earlestown-Manchester is ATW/Northern.
Chester-Manchester is ATW/Northern (via different routes), but also has a VT option (via Crewe).
I don't think any of these overlaps is significant, especially as ATW is up for refranchising in 2018, probably with altered boundaries.

There are already cases of 2 franchises under single ownership running routes together, not to mention the 100% monopolies across most of the routes in the country (until franchise renewal).
 

lejog

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IIRC the TPE franchise award to First was also referred to the CMA, but soon cleared. The fact that this has been rumbling on for six months and that Arriva have 5 days to formally reply suggests the CMA are getting serious.
 
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talltim

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Speculating on the "38 overlapping journeys", there are these obvious Northern/XC overlaps:
Chesterfield-Sheffield-Wakefield-Leeds-York
Chesterfield-Sheffield-Doncaster-York
Manchester-Stockport-Macclesfield-Stoke

And if you count 1 journey as a station pair, that already accounts for (fumbles for back of an envelope) something like 18 "journeys".

Then to a lesser extent, as this route as a whole is less well served by either franchise:
Darlington-Durham-Chester-le-Street-Newcastle-Morpeth
(very few Northern services S of Newcastle, 1 XC stopping at C-l-S)

Does that make sense?

Although there are overlaps in your example, not all of the station pairs have Arriva franchises as the only operator. Eg Chesterfield-Sheffield also has EMT, Sheffield-Doncaster also has TPE, Doncaster-York has loads
The Sheffield-Wakefield section also uses different routes for XC and Northern
 

185

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IIRC the TPE franchise award to First was also referred to the CMA, but soon cleared. The fact that this has been rumbling on for six months and that Arriva have 5 days to formally reply suggests the CMA are getting serious.

There's only really Hull-Selby where that (FG) could be argued, and even then there's an alternative.
 

lejog

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There's only really Hull-Selby where that (FG) could be argued, and even then there's an alternative.

IIRC there were also First bus services in Manchester and West Yorkshire which overlapped the new TPE stopping services.
 

bluenoxid

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I think the north East will be of particular focus with routes on Newcastle to Carlisle and down around Darlington and Middlesbrough. In addition, what about out of Leeds towards Pontefract
 

po8crg

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There are a few ATW/NR overlaps. For instance Newton-le-Willows to Manchester.
 

geoffk

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Time we scrapped the CMA or at least banned them from anything to do with public transport. They and their predecessors the OFT and MMC have made no positive contribution to getting more people on to buses and trains, just made it more difficult, with restrictions on joint ticketing and timetabling.

They have consistently failed to recognise the structure of the transport industry or the market in which it operates. Public transport integration, and many of the measures which help to promote it, will, by definition, distort competition in the way that the CMA defines it. We have the usual British muddle, somewhere between a stated desire for integration on the one hand and the rigid application of Thatcherite free-market dogma on the other - and we cannot have both.
 

Andyjs247

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Deregulation of buses carried out by Thatcher's Transport Secretary Nicholas Ridley has been a disaster frankly. Only in London where buses are still regulated is there a decent network of bus services. In much of the rest of the country you had the farce of multiple operators buses racing between stops to get to the next stop and pick up passengers first; traffic jams of mostly empty buses on profitable routes etc. Meanwhile unprofitable routes were cut. Prices went up. So instead of having a usable bus service people increasingly turned to the private car. And guess what, congestion increased!

So I'm glad I have an accessible station. I don't care that 100% of the trains at my local station are operated by one operator - I can get a train to Oxford more cheaply than the bus; and it doesn't get stuck in traffic on the A34. And the service runs both late into the evening and on a Sunday when my local bus doesn't. But it would be better still if we could have more integration between rail and bus so maybe I wouldn't need a car at all. Competition and deregulation have done nothing for integrated transport or prices! CMA need to leave transport alone.
 
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eastwestdivide

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Although there are overlaps in your example, not all of the station pairs have Arriva franchises as the only operator. Eg Chesterfield-Sheffield also has EMT, Sheffield-Doncaster also has TPE, Doncaster-York has loads
The Sheffield-Wakefield section also uses different routes for XC and Northern

Fair point, but one of the planned new Northern fast services will be via Wakefield Westgate, as well as the existing stopping service.
And if Arriva are not the only operator, the result of the franchise award was still to reduce the number of companies operating on those pairs, and the reduction of competition is what the CMA are interested in.

Anyway, it'll all come out in the wash.
 

LNW-GW Joint

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Fair point, but one of the planned new Northern fast services will be via Wakefield Westgate, as well as the existing stopping service.
And if Arriva are not the only operator, the result of the franchise award was still to reduce the number of companies operating on those pairs, and the reduction of competition is what the CMA are interested in.
Anyway, it'll all come out in the wash.

ICWC/East Midlands/West Midlands/XC/W&B franchises are all up for renewal in the near future.
The "conflict" map will change repeatedly.
I'd also say Northern is one of the TOCs least reliant on Advance/TOC-specific fares (ie a higher proportion of its fares are regulated, either by DfT or the PTEs).
 

IanXC

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There are some bus/train overlaps around Selby, for instance Selby-York and Selby -stopping- Leeds have Northern Rail and Arriva Bus.
 
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With respect to why 'monopoly' franchises are not investigated, one of quirks here is that CMA's locus arises because the NT franchise appears to them to be a merger which they can investigate and then seek undertakings from Arriva over. The legislation gives them specific role on mergers. A business which already exists can be investigated as well but the process is much more convoluted.
 

aformeruser

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IIRC the TPE franchise award to First was also referred to the CMA, but soon cleared. The fact that this has been rumbling on for six months and that Arriva have 5 days to formally reply suggests the CMA are getting serious.

There's only really Hull-Selby where that (FG) could be argued, and even then there's an alternative.

The First one focused on Marsden and Slaithwaite transferring from Northern to TPE with First operating all bus services in Marsden and Slaithwaite. With Northern running some Selby-Hull services and VTEC running some services and more expected soon I don't think Hull-Selby was even looked in to by the CMA.

The thing I don't get is you can all bus services on a route operated by one operator, with no realistic alternative and the CMA aren't bothered but if the same operator has overlapping routes which all run between points A and B then they look in to it.
 

edwin_m

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Time we scrapped the CMA or at least banned them from anything to do with public transport. They and their predecessors the OFT and MMC have made no positive contribution to getting more people on to buses and trains, just made it more difficult, with restrictions on joint ticketing and timetabling.

They have consistently failed to recognise the structure of the transport industry or the market in which it operates. Public transport integration, and many of the measures which help to promote it, will, by definition, distort competition in the way that the CMA defines it. We have the usual British muddle, somewhere between a stated desire for integration on the one hand and the rigid application of Thatcherite free-market dogma on the other - and we cannot have both.

This (except I wouldn't scrap them entirely as they are needed in many non-transport industries).

I thought the whole point of the franchising process was to ensure "competition for the market" and the rail regulator was there to deal with any issues caused by anti-competitive practices afterwards?

If there is a need to ensure the maximum competition then it should be taken into account when pre-qualifying franchise bidders. However, the extent of overlap of rail franchises with each other and with bus networks would then mean most bidders were disqualified, which is not a good way of securing value for public money.

As it is we will now have various public bodies wasting taxpayers' money arguing about this, to the benefit of nobody except the civil servants who should have something better to do, and of course the lawyers.
 
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