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OFT refers anticipated acquisition by Firstgroup PLC of the Intercity East Coast Franchise

217/04      21 December 2004

The OFT today referred the anticipated acquisition by FirstGroup PLC of the InterCity East Coast Franchise (ICEC) to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of passenger transport services on some origin and destination points along the ICEC route. Concerns arise in particular relation to services between Doncaster, Grantham and London and in North Yorkshire.

Vincent Smith, OFT Director of Competition Enforcement, said:

'If FirstGroup, which currently holds Hull Trains and the TransPennine Express Franchise, also wins the East Coast Franchise, it will become the only operator between certain points along the route – in particular on certain important mainline routes between Doncaster, Grantham and London and also on some routes in North Yorkshire. This might lessen competition, to the detriment of the travelling public even though these routes are subject to regulation. First Group has not offered any undertakings that the OFT has been able to accept in lieu of a reference. The merger has therefore been referred to the Competition Commission for further investigation.' 

The CC is expected to report by June 2005.

NOTES

1. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. 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; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. The text of this decision will be placed on the mergers section.

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