Franchise agreement and monopoly?

[Monkey Magic]

I am just curious, wasn't the idea of VTEC that it meant that Virgin weren't seen as having a monopoly on services, and Stagecoach also not being seen as having a monopoly either.

Does this rebranding as Virgin Trains not violate the principle that was established that they were 'different' companies?

I am assuming that they must have had the nod and the wink from DFT to be able to do this?

 

[Retorus]

I am just curious, wasn't the idea of VTEC that it meant that Virgin weren't seen as having a monopoly on services, and Stagecoach also not being seen as having a monopoly either.

Does this rebranding as Virgin Trains not violate the principle that was established that they were 'different' companies?

I am assuming that they must have had the nod and the wink from DFT to be able to do this?

The whole not being allowed a monopoly thing is a myth isn't it?

 

[JaJaWa]

I am just curious, wasn't the idea of VTEC that it meant that Virgin weren't seen as having a monopoly on services, and Stagecoach also not being seen as having a monopoly either.

Does this rebranding as Virgin Trains not violate the principle that was established that they were 'different' companies?

I am assuming that they must have had the nod and the wink from DFT to be able to do this?

They were investigated by the Competition Commission, who found the only issue was with some Stagecoach-run bus services around Peterborough, I believe!

 

[marks87]

It didn't take long for the 'M'-word to appear.

 

[Monkey Magic]

Why shouldn't it appear?

Is it not a monopoly?

I'd always assumed that the separation of East and West Coast and the idea that they were two separate companies was to provide a veneer that it was not a monopoly.

 

[SaveECRewards]

Why shouldn't it appear?

Is it not a monopoly?

I'd always assumed that the separation of East and West Coast and the idea that they were two separate companies was to provide a veneer that it was not a monopoly.

I've thought about it a lot and my original feeling was that if you counted all the franchises going north that Stagecoach have a part in (VT, VTEC and EMT) they had a monopoly. However, I've came to the conclusion that the ECML has reasonable competition. There's two open access operators running out of KGX, Great Northern offers a cheaper option to PBO commuters, XC competes on a core of the ECML, ScotRail on Edinburgh to Aberdeen/Inverness. There's also competition by airlines for Edinburgh, Aberdeen and Glasgow (also Leeds and Newcastle but there's no real advantage in flying these).

 

[Liam]

Why shouldn't it appear?

Is it not a monopoly?

I'd always assumed that the separation of East and West Coast and the idea that they were two separate companies was to provide a veneer that it was not a monopoly.

Isn't London-Manchester a monopoly? London-Newcastle too. I've never been sure why London-Scotland would be a special case.

 

[marks87]

Why shouldn't it appear?

Because:

Is it not a monopoly?

No.

 

[Monkey Magic]

Isn't London-Manchester a monopoly? London-Newcastle too. I've never been sure why London-Scotland would be a special case.

I assume the idea would be that because there are two routes - London - Scotland that there is 'theoretically' a choice of service and hence competition between the two (and all the benefits that this entails). If the two routes are controlled by the same company then there is no competition.

but as SaveECRewards points out

I've thought about it a lot and my original feeling was that if you counted all the franchises going north that Stagecoach have a part in (VT, VTEC and EMT) they had a monopoly. However, I've came to the conclusion that the ECML has reasonable competition. There's two open access operators running out of KGX, Great Northern offers a cheaper option to PBO commuters, XC competes on a core of the ECML, ScotRail on Edinburgh to Aberdeen/Inverness. There's also competition by airlines for Edinburgh, Aberdeen and Glasgow (also Leeds and Newcastle but there's no real advantage in flying these).

Although they do have a monopoly on direct services London-Scotland. I'd assume that there is now no way they can object to the open access bidders running KCX-Scotland now.

 

[LNW-GW Joint]

Franchises give the winner a limited DfT monopoly over specific services.
There has never been any limit on how many franchises/concessions any one owner can operate.
National Express once had 9 franchises, and Govia, Stagecoach, Arriva and Abellio currently have interests in 4.
Competition is at the bidding stage, not during operation (Northern, TPE and East Anglia currently in competition).
The CMA has the right to intervene if it thinks there are issues, but so far its rulings have been limited to services outside the rail franchises (ie buses).
It is key that a franchise is of limited duration and is subject to periodic open competition - also why long franchises are problematic.
ICWC and ICEC could both have been won by First rather than Virgin/Stagecoach (as well as potentially running TPE to Scotland, and Scotrail), and there would still not have been any competition issues.

 

[Monkey Magic]

Franchises give the winner a limited DfT monopoly over specific services.
There has never been any limit on how many franchises/concessions any one owner can operate.
National Express once had 9 franchises, and Govia, Stagecoach, Arriva and Abellio currently have interests in 4.
Competition is at the bidding stage, not during operation.
The CMA has the right to intervene if it thinks there are issues, but so far its investigations have been limited to services outside the rail franchises (ie buses).
It is key that a franchise is of limited duration and is subject to periodic open competition.
ICWC and ICEC could both have been won by First rather than Virgin/Stagecoach (as well as potentially running TPE to Scotland, and Scotrail), and there would still not have been any competition issues.

Agreed, although there are fairly obvious question marks about the rigour of oversight and the degree of openness/competition. Another government could easily interpret the issue differently.

 

[PaxVobiscum]

Pax also means "peace"

Less chili and more "Chill ye"

 

[glbotu]

My understanding was that in the early days of privatisation, the goal was inter-rail competition, but this concept has been phased out in preference to competition with other transport modes, hence why the competition commission only flagged up issues with some Lincolnshire buses. It's obviously impractical for the railway to compete with itself because there are only so many paths that can be implemented.

Even Open Access Operators aren't really looking to "compete" with the franchised operator (that's why there's the "not primarily abstractive" rule). They're there to "pick up the slack" that has been missed by the DfT and franchise operator. Hence why Hull, Sunderland and Bradford have OAO services. (It's also why I'm notably sceptical about the Edinburgh - London OAO express train).

 

[Robertj21a]

Surely, it's Stagecoach who run the East Coast. Virgin has only 10%.

 

[Agent_c]

Is it not a monopoly?

No, it is not.

The relevant market is not "Train services between X and Y" it is "Transportation between X and Y". Virgin East, and Virgin West, are just two companies you can ride from Edinburgh to Scotland with. You can also take a number of airlines, or a number of coach services.

Even if we did narrow the market to "Trains" it is still not a monopoly. You have the option of taking XC to Birmingham and changing onto another operator, or boarding the sleeper.

IIRC there were competition concerns for the two services VTEC run beyond Edinburgh competing with Stagecoach/Citilink/Megabus for those scottish stops only, but that was resolved.

 

[LNW-GW Joint]

Even if we did narrow the market to "Trains" it is still not a monopoly. You have the option of taking XC to Birmingham and changing onto another operator, or boarding the sleeper.

Added to which, many of the fares to Scotland are Any Permitted and you can travel with whoever you like via any one of many routes.
All the operators will get cuts of the fare via the ORCATS mechanism, even if you travel on one TOCs trains.
FGW has more of a monopoly between London and Cardiff, and SWT between London and Southampton, but no-one seems to care very much about them.
It's inherent in the franchise specification.