Watchdog threatens East Coast probe

East Coast trains Stagecoach and Virgin Trains own the consortium that will operate services on the East Coast main line from next month.

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The consortium that will operate East Coast rail services has been ordered to address competition concerns or face an in-depth investigation.

The Competition and Markets Authority has asked ICRL, owned by Stagecoach and Virgin Trains, to make remedies on certain routes.

Some East Coast services overlap with a small number of Stagecoach or Virgin coach or rail services.

The CMA said the situation could result in higher fares or poorer service.

The rail routes in question are between Peterborough, Grantham and Lincoln, along with coach and rail services between Edinburgh, Dundee and Aberdeen.

Andrea Coscelli, CMA executive director of markets and mergers, said thousands of consumers who relied on public transport services could be affected.

"ICRL can now offer a resolution to these concerns to avoid the [franchise] award being referred for an in-depth phase 2 investigation," he said.

The consortium has been given five working days to offer undertakings that would address the competition concerns.

The CMA then has until 20 February to decide whether those undertakings were sufficient.

March start

It said it did not have concerns about the franchise, which ICRL won last November, in most areas.

Stagecoach, which owns a 90% stake in the consortium, said it would study the decision and work with the CMA. The company aimed to start running services under the Virgin Trains East Coast brand as planned from 1 March.

The joint venture won the East Coast franchise in November 2014, promising to invest £140m in the London to Scotland route over eight years. It will pay the government £3.3bn for the contract.

The franchise, which covers the route between London and Edinburgh, has been publicly run since 2009.

A Department for Transport spokesperson said the franchise offered "the best deal for passengers".

"Stagecoach/Virgin will take over responsibility for the franchise on 1 March 2015 as planned. They are now working to address the CMA's concerns. It would not be appropriate to comment further while the CMA's review is ongoing."

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