CMA: Arriva Northern award could lead to higher fares
THE Competition and Markets Authority (CMA) says the award of the Northern rail franchise to Arriva in December 2015 may result in higher fares on some local routes.
Its provisional finding suggests there is a substantial lessening of competition (SLC) on four rail routes - Leeds to Sheffield, Wakefield to Sheffield, Chester to Manchester and Chester to Stockport - as well as nine bus routes. Some Arriva operations - Arriva Trains Wales, CrossCountry and Grand Central - have overlap with the Northern franchise. The company also operates local bus routes in the north of England.
The acquisition of the franchise creates 167 overlaps between Northern and other Arriva train operations, and 1,068 between Northern and Arriva UK. However, while the CMA has a range of powers, it notes: “The relevant costs of any feasible structural remedy far exceed the scale of the adverse effects of the SLC. Further, the CMA’s view is that behavioural remedies are equally effective to address the SLC and its resulting adverse effects, and will not create significant distortions in market outcomes.”
The CMA proposes restrictions on bus and rail fare increases on affected routes until the end of Arriva’s stewardship of the Northern franchise.
Phil Evans, the CMA’s inquiry chairman, said: “We assessed the franchise award thoroughly and have provisionally found that it could lead to higher fares for passengers on some local rail and bus services in the north of Englands.
“However, we have not identified competition concerns arising from this merger on most routes and we recognise Arriva’s commitment to bringing a range of benefits through the Northern rail franchise to passengers, such as better trains and improved customer service. Our remedies will protect passengers in the relatively few local areas where we have identified competition concerns.
“We are now inviting responses to our provisional findings and remedies notice, and will continue to assess all the evidence before we make our final decision.”
Responses should be made by September 30.