Arriva Northern franchise could face CMA investigation
Barely a month has elapsed since Arriva Rail North (ARN) was awarded the Northern rail passenger franchise, but it could face investigation by the Competition& Markets Authority unless that body receives firm assurances soon.
ARN is a subsidiary of Arriva UK ; it runs more trains than any other operator. But the CMA is concerned that Arriva’s control of the Northern franchise could lead to a ‘substantial lessening in competition’.
Arriva operates other franchises, notably Arriva Trains Wales and Cross-Country Trains, and the CMA says it has identified 38 overlapping journeys where there is ‘little or no competition’ from other service providers.
Arriva is also a major bus operator; some of its services overlap with those of Arriva Northern. CMA has identified 44 routes where there is ‘little or no competition’ from other bus or rail service operators.
The authority is concerned that lack of competition could lead to fare increases and/or a poorer standard of service for the passenger.
“Arriva now has five working days (until 19 May) 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,” said a CMA spokesperson.
A phase 2 investigation takes place when the CMA believes a ‘relevant merger situation’ has been created.
“Under the Enterprise Act (2002) a ‘relevant merger situation’ is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’)”, the CMA clarified.
The CMA has until 26 May to accept any undertakings given by Arriva. If it is not satisfied the merger will be referred.
Arriva Privatisation: In a separate development, the German state owner, Deutsche Bahn (DB), is to part privatise Arriva by selling a 45% stake in its UK subsidiaries, The Guardian reported earlier in the month. A stock exchange flotation is expected to raise £3.6bn. DB owns rail freight operator DBS Schenker, runs several passenger franchises and has other rail interests.