Investigation into TSGN award announced

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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.

Yes, but this is always the case. There's absolutely nothing new here. Govia are not being treated in any special way and there is no implication that Go-Ahead will be asked to divest themselves of any bus routes, although they may, as has happened on previous franchises.

 

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Should anyone still be in any doubt that this is business as usual I refer you to the CMA Rail franchises FAQs:

https://www.gov.uk/government/publications/rail-franchises-questions-and-answers

I've quoted part of the intro and Q1 below as this seems most relevant. Q8 of the FAQ (not quoted below) deals with some of the above discussion into interim measures should they be needed.

Under section 66(3) of the Railways Act 1993, entering into a rail franchise agreement constitutes an acquisition of control of an enterprise under the merger control provisions of the Enterprise Act 2002. The Competition and Markets Authority ('CMA') therefore reviews the award of rail franchises under the Enterprise Act 2002 with the aim to complete a Phase 1 investigation of the winning bidder for the rail franchise prior to the start of operations. The CMA will assess whether the award could give rise to competition concerns.

Footnote: The CMA will not assess possible competition concerns against the pre-award situation but against a hypothetical counterfactual in which the award is made to a firm that raises no competition concerns (or only competition concerns that are resolved through a remedy) – see Merger Assessment Guidelines (CC2 and OFT1254, September 2010), paragraphs 4.3.28-29. 2 Where the winning bid meets the jurisdictional thresholds for notification under the European Merger Regulation, the CMA's timetable will not begin before the European Commission has taken a decision on reference to the UK (see Question 4 below).

1. How and when does the CMA anticipate to be contacted by bidders or prospective bidders for rail franchises?

All bidders are encouraged to enter into pre-notification discussions with the CMA shortly after having submitted their bids.

Although the CMA will only ultimately conduct a formal Phase 1 merger investigation into the winning bid, pre-notification with all bidders will allow the investigation timetable to commence the moment the winner is selected by the DfT or TS. 2 The CMA believes that, in practice, this process is necessary, given the relatively short timescale envisaged between selecting the winning bid and the commencement of operations. Bidders should commence pre-notification 4 – 6 weeks prior to the expected date of the award.

Generally, pre-notification will involve bidders providing the CMA with a draft notification for discussion, with the aim of producing a final notification that allows the CMA's investigation to begin in the event the bidder is awarded the franchise. In order to potentially limit the amount of information required and to assist the CMA's preliminary analysis, the CMA encourages each individual bidder to discuss with it as early as possible what information should be provided about the overlaps between the bidder's existing bus, coach and train services and the rail franchise route(s), taking account of the specific facts of each bidder's case. Where there are no overlaps between a bidder's existing services and the rail franchise routes, the bidder is asked to inform the CMA of this position in writing on an informal basis. If the franchise is awarded to this bidder, the bidder is free to decide whether to formally notify the franchise award to the CMA given the voluntary merger regime in the UK.

The CMA also recommends that, where relevant, bidders and their legal advisers consider possible undertakings in lieu of a reference to Phase 2 as early as possible in the process and ideally during pre-notification, and the CMA is open to engage in early discussions with the bidders on possible undertakings. This will maximise the chances of acceptance of undertakings that are offered at the end of the CMA's Phase 1 investigation, should the franchise award give rise to competition concerns.