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Investigation into TSGN award announced

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Class377/5

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The Competitions and Market Authority have announced they are running an investigation into the award of TSGN franchise.

https://www.gov.uk/cma-cases/govia-...nk-southern-and-great-northern-rail-franchise

The CMA is investigating the award of the Thameslink, Southern and Great Northern passenger rail franchise to Govia Thameslink Railway Limited (a joint venture between Go-Ahead Holding Limited and Keolis (UK) Limited).

Statutory timetable

Phase 1 Action
7 October 2014 Deadline for phase 1 decision*
5 August 2014 Invitation to comment issued

(*) This date is the current statutory deadline by when the decision will be announced. If any change occurs, the information is refreshed as soon as practicable. However, the CMA cannot guarantee that the decision will be announced on or before this current deadline, as the deadline of a given case may change during the merger assessment process due to different reasons.

Phase 1

Launch of CMA merger inquiry

The CMA launched a merger investigation on 5 August 2014.

Invitation to comment: closes 18 August 2014

5 August 2014: The Competition and Markets Authority (CMA) is considering the award of the Thameslink, Southern and Great Northern passenger rail franchise to Govia Thameslink Railway Limited (a joint venture between Go-Ahead Holding Limited and Keolis (UK) Limited) and whether that award has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

With the time frame, doesn't seem to change anything actually happening tho.
 
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petersi

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swt_passenger

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Hopefully this will be the end of franchising system as only the lawers seam to benefit from it

Really? I think there have been competition investigations after franchise award before without there ever being changes to the decision.

If they aren't happy with the basic principle of the merger of the two franchises, wouldn't the time to have queried that policy have been when the ITT came out?
 

petersi

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Really? I think there have been competition investigations after franchise award before without there ever being changes to the decision.
Even if the decision is not changed the legal professionals will still charge for reviewing evidence etc. This type of enquiry is never cheap
 

LNW-GW Joint

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No but it means the lawyers will be happy
Hopefully this will be the end of franchising system as only the lawers seam to benefit from it

From what I remember, when the CMA last got involved with rail franchising, they put some conditions on the ownership of some bus services in Scotland.
They were entirely happy with the Scotrail franchise moving from National Express to First, but didn't like the market share that First then had in certain areas.
Do GoAhead run bus services in the new Thameslink area they will serve?
They also investigated the rolling stock market and came down in favour of the ROSCOs, to the continuing fury of the DfT.

It isn't a legal challenge to the franchise system, or the awarding of the franchise, which has been completed.
But I agree the lawyers will make a mint!
 
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Busaholic

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From what I remember, when the CMA last got involved with rail franchising, they put some conditions on the ownership of some bus services in Scotland.
They were entirely happy with the Scotrail franchise moving from National Express to First, but didn't like the market share that First then had in certain areas.
Do GoAhead run bus services in the new Thameslink area they will serve?
They also investigated the rolling stock market and came down in favour of the ROSCOs, to the continuing fury of the DfT.

It isn't a legal challenge to the franchise system, or the awarding of the franchise, which has been completed.
But I agree the lawyers will make a mint!

Yes, Brighton & Hove is a highly-regarded GoAhead bus company as is Metrobus in the Crawley/Redhill area, but they don't own anything in the Herts area (their London operations of course are all on behalf of TfL, so don't count). In Scotland First had to get rid of certain inter-city coach routes but the whole futile exercise was shambolic, with emphasis on the 'sham'. Here in Cornwall, First are allowed to run 95% of the train services and are also the largest bus operator, but that's O.K. because there's no co-ordination, so there's a good chance as your train draws into the station, the bus outside to where you live will just be setting off. That's competition , folks, and that's apparently what we have voted for.
 

causton

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But the Go-Ahead buses that run in the south are in areas that Southern already serve so that doesn't make that much difference... surely?

Do Go-Ahead run any buses along the FCC Great Northern/Thameslink (north end) routes?
 

Minstral25

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It was obvious when setting up the bidding process that there would be a reduction of competition which is why it was set up as a Management Contract and not a full franchise. It was done because of the major implications of the Thameslink work which a normal Franchise would struggle to operate within the constraints.

I think I will write to them asking them to halt the process as it is a waste of my tax money for the reasons above.

The only purpose this will serve is to make some rich lawyer richer. I chose the wrong profession!
 

TEW

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I agree with the above post. Surely we don't need an investigation to tell us that the new TSGN franchise will lead to a reduction in competition? That was obviously going to be the case from the start. The question is whether that is a good or a bad thing. Considering the massive upheaval to services in the future with the Thameslink project and the increasing merger of what are currently FCC and Southern routes surely one franchise makes sense?
 

Busaholic

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But the Go-Ahead buses that run in the south are in areas that Southern already serve so that doesn't make that much difference... surely?

Do Go-Ahead run any buses along the FCC Great Northern/Thameslink (north end) routes?

No, except on contract to TfL entirely within Greater London area, in which case they SHOULD be out of scope of this investigation
 

Aictos

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It was obvious when setting up the bidding process that there would be a reduction of competition which is why it was set up as a Management Contract and not a full franchise. It was done because of the major implications of the Thameslink work which a normal Franchise would struggle to operate within the constraints.

I think I will write to them asking them to halt the process as it is a waste of my tax money for the reasons above.

The only purpose this will serve is to make some rich lawyer richer. I chose the wrong profession!

I fully agreed, why didn't these muppets raise this when the ITT was first released? Answer because they rather waste taxpayers moneys on a investigation that isn't needed.
 

Stats

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Isn't this just a statutory requirement for all mergers over a certain market size (where the merger in this context is the franchise with Govia, not two franchises being merged)? I am not convinced there is anything to see here. This appears to be nothing more than business as usual. The OFT assessed most, if not all, franchise awards including Govia's retention of South Central in 2009. http://webarchive.nationalarchives....t.gov.uk/OFTwork/mergers/decisions/2009/govia
 
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oldman

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In Scotland First had to get rid of certain inter-city coach routes but the whole futile exercise was shambolic, with emphasis on the 'sham'.

If I remember, First in Scotland had (and in some cases still have) to maintain frequencies on certain local routes which overlapped rail. It was National Express, earlier, who had to sell Scottish Citylink when they won the Scotrail Franchise.

It was indeed futile but that has never stopped the Competition authorities, as they demonstrated with their investigation into the bus industry as a whole.
 

HH

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Isn't this just a statutory requirement for all mergers over a certain market size (where the merger in this context is the franchise with Govia, not two franchises being merged)? I am not convinced there is anything to see here. This appears to be nothing more than business as usual. The OFT assessed most, if not all, franchise awards including Govia's retention of South Central in 2009. http://webarchive.nationalarchives....t.gov.uk/OFTwork/mergers/decisions/2009/govia

You are absolutely right. This would have happened regardless of who'd won the bid. What is possible is that Go Ahead will have to make some changes in its bus operations; however, it should be borne in mind that it was already running Southern with the same bus services, so I wouldn't expect many.
 

Yabbadabba

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You are absolutely right. This would have happened regardless of who'd won the bid. What is possible is that Go Ahead will have to make some changes in its bus operations; however, it should be borne in mind that it was already running Southern with the same bus services, so I wouldn't expect many.

It was still running the same buses when it previously run the Thamesslink franchise along with the South Central franchise.
 

Minstral25

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Can someone with better information correct me if I am wrong but I was under the impression this is a management contract where the fares go to the DfT and not a Franchise where the fares go to the operating company?

So in a way it is a state run piece of Railway where the private company is on contract to supply train services.

That's why Southern doesn't join until 2015 and they are still keeping the companies operating very separately until then even though they own both - because Southern is still a franchise.
 

swt_passenger

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Isn't this just a statutory requirement for all mergers over a certain market size (where the merger in this context is the franchise with Govia, not two franchises being merged)? I am not convinced there is anything to see here. This appears to be nothing more than business as usual. The OFT assessed most, if not all, franchise awards including Govia's retention of South Central in 2009. http://webarchive.nationalarchives....t.gov.uk/OFTwork/mergers/decisions/2009/govia

Thanks for posting that. I was pretty sure it was business as usual and a regular thing post franchise award when I posted #3 above, but I couldn't see much evidence at a quick look...
 

LNW-GW Joint

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Can someone with better information correct me if I am wrong but I was under the impression this is a management contract where the fares go to the DfT and not a Franchise where the fares go to the operating company?
So in a way it is a state run piece of Railway where the private company is on contract to supply train services.
That's why Southern doesn't join until 2015 and they are still keeping the companies operating very separately until then even though they own both - because Southern is still a franchise.

TSGN is indeed a gross cost management contract.
DfT takes the revenue and the revenue risk.
Govia takes the cost risk against agreed payments from the DfT.
 

Monty

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Why an earth did they wait until now to start an investigation? The merge of this franchises has been planned for years..
 

LNW-GW Joint

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Why an earth did they wait until now to start an investigation? The merge of this franchises has been planned for years..

It's nothing to do with the rail franchise merger.
It's only about whether Govia (or GoAhead as Keolis can't be involved) has gained any unfair competitive advantage in public transport as a whole (ie bus routes) as a result.
 

Monty

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It's nothing to do with the rail franchise merger.
It's only about whether Govia (or GoAhead as Keolis can't be involved) has gained any unfair competitive advantage in public transport as a whole (ie bus routes) as a result.

But surely that would be no different than if Stagecoach or First Group had won it instead? In fact nearly all of the companies shortlisted for the TSGN have extensive Bus and Rail operations in their portfolios.
 
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Stats

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But surely that would be no different than if Stagecoach or First Group had won it instead? In fact nearly all of the companies shortlisted for the TSGN have extensive Bus and Rail operations in their portfolios.
The CMA has the jurisdiction to examine a merger where two enterprises cease to become distinct and UK turnover of the combined enterprise exceeds £70m. In rail franchising the franchise to be awarded is one enterprise and the winning bidder a separate distinct enterprise. The awarding of the franchise to the winning bidder creates a new single enterprise. As this is regarded as a merger the CMA conducts an initial examination to identify if there are any potential competition concerns with other overlapping rail franchises or bus routes. As I and others have said this is standard practice that occurs after every rail franchise award. It wouldn't matter who won the franchise or whether they had other rail, air, coach or bus operations in the franchise area.
 

DJL

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That's why Southern doesn't join until 2015 and they are still keeping the companies operating very separately until then even though they own both - because Southern is still a franchise.

Ahh, This had been bugging me - makes sense now!
 

Busaholic

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In January 2009 Stagecoach bought the employee-owned Preston Bus: in November 2009 they were ordered by the Competition Commission to sell it, which they duly did in 2011. In the meantime they were required to run it 'at arm's length', not to alter it in any meaningful way or even to repaint any buses in Stagecoach corporate colours, although I believe some had already been to the painters. I know some say comparing buses to trains is like comparing apples to oranges, and the franchising system on the railways makes things devilishly complicated, but be in no doubt that if the Competition and Markets Authority were to rule that Go-Ahead had to divest themselves of something, be it a single bus route, a group of bus routes (or, indeed, a complete bus company) or even one of its rail routes then, subject to the appeals process etc, it would eventually have to be done. I would imagine they could even rule that the Keolis/GoAhead percentage split had to alter: if we didn't already know, we do after the WCML fiasco that even the Dept of Transport can be challenged and overruled.
 

Tetchytyke

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The only interesting development would be if Go-Ahead had to get rid of a bus company or the railway company. Having to choose between a management contract or Brighton and Hove buses would be fun.
 
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