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Stagecoach offers fee-cap to ease East Coast rail competition concerns

Last updated: 02:22 21 Feb 2015 AEDT, First published: 03:22 21 Feb 2015 AEDT

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Stagecoach Group (LON:SGC) has offered to cap certain fares on its East Midlands trains in order to ease competition fears surrounding its East Coast rail franchise award.

Back in November, the UK government awarded the InterCity East Coast rail franchise to Inter City Railways Ltd, a joint venture between Stagecoach, which holds 90%, and Virgin Trains, which holds the rest.

However, the UK’s Competition Markets Authority, said it believes “that it is or may be the case” that the franchise award may result in a “substantial lessening of competition”, and that there is a “realistic prospect” that higher fares could arise.

Specifically, the regulator highlighted overlap of East Coast rail and Citylink coach services between Edinburgh, Dundee and Aberdeen, where the only competing public transport services are provided by ScotRail and Arriva CrossCountry.

Stagecoach has been working with the regulator to resolve anti-trust concerns that the regulator raised about the contract.

Today, the watchdog said: "The undertakings offered by Stagecoach in relation to the rail journeys commit it to a price cap on certain fares set by East Midlands Trains and provide for the ongoing monitoring of such rail fares by the CMA."

The CMA will now conduct a public consultation "shortly," before making a decision on whether or not to accept Stagecoach's undertakings by 21 April.

The authority said it may extend the deadline if it believes there are any special reasons to do so.

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