Merger investigation into Arriva’s Northern franchise win

The Competition and Markets Authority (CMA) has referred the awarding of the Northern Rail franchise to Arriva for an in-depth investigation.

CMA said it was concerned that because the franchise overlaps with rail and bus services already run by Arriva, any loss of competition could lead to higher prices or a reduction of service quality.

“Arriva has not offered any undertakings in lieu and the CMA will therefore now refer the merger,” it confirmed.

A decision on the merger will be made by a group of independent panel members, supported by a case team of CMA staff. The deadline for the final report is November 3.

A spokesman for Arriva said: “We are of course disappointed to have reached this point after having discussed the possibility of undertakings in lieu of a referral to phase two with the CMA.

“However, during this process it became apparent that the development of a package of measures which would have been acceptable both to the CMA and to Arriva was unlikely without the more detailed assessment that phase two allows for. We will continue to work closely with the CMA and remain fully committed to delivering our planned service improvements for our passengers, including those for the Northern franchise.”

In announcing the details of its initial merger review in May ( RAIL 801), CMA said it found that 38 journeys overlap with little or no competition from other service providers.

Arriva also operates 5,900 bus services, including services in the North East and North West, and CMA said that there is significant overlap between the bus network and the services offered by Northern. It said it had found the franchise award creates competition concerns relating to these ‘bus-onrail’ overlaps on 44 routes.

Under the Enterprise Act 2002 a ‘relevant merger situation’ is created if two of more enterprises have ceased to be distinct and the value of the turnover in the UK exceeds £70 million.