The competition watchdog has raised concerns over the award of the South Western franchise to FirstGroup and MTR, after investigating the development since May.
While the Competition and Markets Authority (CMA) said there weren’t any issues on the majority of routes the group would operate, there were concerns on one route as FirstGroup already operates the Great Western Railway franchise, running the sole other train service between London and Exeter.
The CMA said it was concerned that FirstGroup having control over both services could reduce competition on the route, leading to higher fares or a decline in service for passengers.
The decision comes ahead of the start of the franchise on 20 August.
Acting chief executive and decision maker, Andrea Coscelli, said:
This is a crucial rail route to the South West, used by around half a million passengers a year. It’s therefore vital that passengers do not suffer as a result of reduced competition.
The CMA believes that without its intervention, FirstGroup may be able to increase fares for passengers between London and Exeter, as it will be the only rail operator running all services on this route.
We look forward to hearing from the companies involved about how they think they can overcome this.
FirstGroup and MTR will now have the opportunity to offer suggestions to the CMA to address the concerns it has flagged. They have five days to do so. If the CMA agrees the suggestions solve the issue, the firms will be able to avoid an in-depth phase two investigation.
In previous cases, such as over the Northern franchise to Arriva, competition concerns have been addressed by the operator agreeing to price caps for the affected line.
A FirstGroup spokesperson said:
We have been discussing our plans for the new South Western franchise with the CMA for several months and we are pleased that on most routes, it has found no competition issues.
Now that this update gives more clarity, we look forward to submitting our proposals which we envisage will satisfy their concerns.