Price cap proposals by First Group and MTR to tackle competition concerns on their takeover of the South Western franchise this month, have been accepted by the Competition and Markets Authority (CMA).
The watchdog said it had accepted the offer made by the two firms, which involved "a price cap on unregulated fares between London and Exeter on both South Western and GWR [Great Western Railway] services". The decision means the award of the franchise will go ahead this month, without the deal being referred for a more in-depth investigation.
Ticket prices on the route will be linked to those on a number of other comparable services to ensure they are kept in line with the market.
The firms have also offered to maintain the availability of cheaper advance fares on both services, again by linking them with similar routes.
The firms were awarded the South Western rail franchise earlier this year by the Department for Transport. Last month, the CMA said while there weren't any issues on the majority of routes the group would operate with the franchise, there were concerns on one in particular, as FirstGroup already operates the GWR 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.
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.
And the CMA said today that FirstGroup and MTR will be required to submit regular reports to the watchdog to show they are complying with the agreement.
Rachel Merelie, executive director of markets and mergers said:
We examined the proposals very thoroughly during the consultation period to ensure that they addressed all of our concerns. We believe that they will protect passengers from fares being pushed up due to lack of competition on this key route between London and Exeter.