The Competition Commission has permitted FirstGroup to vary undertakings it gave when it took over the Scottish rail franchise in 2004. The changes will allow FirstGroup to withdraw seven loss-making bus routes and modify a further eight covered by the undertakings in Glasgow and Edinburgh.
Of the services being withdrawn, five are in Edinburgh and two in Glasgow; all the routes being modified are in Glasgow.
The CC has also refused permission for FirstGroup to modify one other route in Glasgow.
The CC has allowed the changes having been satisfied that there is no reasonable prospect of the routes becoming profitable. The CC has found that FirstGroup’s proposals have not been made for the purpose of switching passengers from bus to rail services, which was the concern identified in 2004. The changes will not therefore undermine the purpose of the original undertakings. Alternative bus services are available on the parts of routes concerned —many of these services are operated by FirstGroup and will remain controlled by the undertakings.
Peter Freeman, CC Chairman and Chairman of the Group for this review, said:
We do not release companies from commitments like this lightly. Whilst we obviously understand the concern that changes to bus services can cause, we believe that passengers will still have access to alternative bus services on the parts of the routes affected. The original intended effect of the undertakings remains in place but we cannot reasonably require FirstGroup to continue running persistently and significantly loss-making services. The funding of local bus services is something that public transport authorities will seek to deal with if they can.
After carrying out a review following advice from the Office of Fair Trading (OFT), the CC’s final decision on varying the undertakings and details of the variations themselves are available at:www.competition-commission.org.uk/inquiries/ref2010/first_scotrail/index.htm. The CC published its provisional decision in August.
The original undertakings were published in October 2004 and followed a CC investigation into FirstGroup’s acquisition of the Scottish rail franchise. The CC concluded that the acquisition, which gave FirstGroup control of local rail and bus services, particularly in Glasgow and Edinburgh, could reduce competition on certain routes and have adverse effects for passengers.
In particular, the CC was concerned that there could be potential for FirstGroup to encourage passengers to switch from bus to rail services by increasing fares or altering service levels and routes. FirstGroup was therefore required to sign undertakings before taking over the rail franchise, which prevented it from altering service levels and fares on a number of local bus services in Glasgow and Edinburgh.
Once the CC has introduced undertakings like these, the OFT has a duty to consider whether at any point a change of circumstances requires the undertakings to be varied or revoked. The OFT then advises the CC, which is required to make the final decision.
The routes FirstGroup intends to withdraw are services X1, X23, X24, X26, X32 and 58 in the Edinburgh operating area and service 165 in the Glasgow operating area. The routes for modification are all in Glasgow—X1, X3/36, X4/X5, 31, 43, 64, 109/119, 255 and 263.
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. Details on the CC’s original investigation into FirstGroup/ScotRail can be found here.
3. Members of the Remedies Standing Group are listed here:
4. Enquiries should be directed to Rory Taylor or Siobhan Allen on 020 7271 0242.
Phone: For enquiries please contact the issuing dept