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Friday 17 September, 2004

Competition Commissn

NEG Greater Anglia Prov Find

Competition Commission
17 September 2004

News Release


50-04
                                                              17 September 2004


                   CC PROVISIONALLY CLEARS NEG/GREATER ANGLIA

The Competition Commission (CC) has provisionally cleared the acquisition by
National Express Group plc (NEG) of the Greater Anglia rail franchise which was
referred to the CC by the Office of Fair Trading (OFT) on 27 May 2004. After
conducting two surveys of users and an analysis of the potential profit
incentives of NEG after the merger, the CC has provisionally concluded that it
will not lead to a substantial lessening of competition.

In particular, the CC considered the effects on competition:

•  between certain rail services and coach services in the Greater Anglia area;

•  between rail services between London and Southend, where NEG now operates 
   both the alternative services through the Greater Anglia and c2c franchises; 
   and

•  between rail services between Peterborough, Cambridge and Norwich, where NEG 
   runs overlapping services through the Greater Anglia and Central Trains 
   franchises.

Professor Paul Geroski, Chairman of the inquiry group and the CC, commented on
the findings:

'In the time available to us following the reference from the OFT, we have been
able to examine closely the competition concerns arising from NEG's acquisition.
After studying evidence which was not available to the OFT, our provisional
conclusion is that the acquisition may not be expected to lead to a substantial
lessening of competition in any of the areas we have been asked to look at.

'We took into account that widespread regulation of both rail fares and service
levels would restrict NEG's ability to make changes adversely affecting
passengers. We also found that many of those who could be most affected by this
acquisition are leisure passengers. As they can be far more flexible in their
choices, there is less likely to be an economic incentive to increase prices.

'Our studies showed a small share of passengers using coach services on the
routes we looked at, suggesting very limited existing competition between coach
and rail. We concluded that there would be no incentive for NEG to raise coach
fares or reduce services in an attempt to force passengers from coach to rail,
since they would risk losing customers who would normally connect to other NEG
coach services at their destination.

'In terms of the Peterborough-Cambridge-Norwich services, we discovered no fare
competition and that there are alternative bus services to act as constraints.
On the Southend lines, we found that only a limited number of passengers have a
realistic choice between the two lines; and that their choice was based on
factors such as stations' proximity to their home and final destination. Again
the ability to raise fares and alter services would be constrained by
regulation, and for unregulated fares by passengers' ability to make other
choices.'

The acquisition of a rail franchise is treated as a merger under the Railways
Act, and the terms of reference did not include asking the CC to consider the
integration of the former Anglia, Great Eastern and parts of the WAGN franchises
into the Greater Anglia franchise.

The CC's findings are set out in the summary of the provisional findings report
which is published on its web site-www.competition-commission.org.uk. The CC
proposes to publish the full provisional findings report on its web site next
week.

NEG has 21 days in which to respond. Views on the provisional findings from
other interested parties are also invited during this period, in writing, by 7
October 2004.

Anyone wishing to submit views is requested to write to:

The Inquiry Secretary,
NEG/Greater Anglia
Victoria House
Southampton Row
London WC1B 4AD

or by email to:

Douglas.McCreadie@competition-commission.gsi.gov.uk.

Notes for editors

1.      The Greater Anglia franchise brought together the former Anglia and
Great Eastern franchises as well as parts of the WAGN franchise. The new
franchise has been branded by NEG as 'one'.

2.      The NEG/Greater Anglia Inquiry Group consists of five members-Professor
Paul Geroski (Chairman of the CC), Sarah Brown, Chris Darke, Diana Guy and Peter
Stoddart-supported by the CC's staff.

3.      The Enterprise Act 2002 (the Act) empowers the OFT to refer to the CC
completed or proposed mergers, either where the merger creates or enhances a 25
per cent share of supply in the UK (or a substantial part thereof) or where the
UK turnover associated with the enterprise being acquired is over £70 million.

4.      The Act requires the CC to consult the main parties on its proposed
decisions and the CC will also publish notices of its provisional findings and
possible remedies on its web site as required by its rules.

5.      Enquiries should be directed to Francis Royle, Chief Press Officer, on
020 7271 0242 (email: francis.royle@competition-commission.gsi.gov.uk) or Rory
Taylor on 020 7271 0398 (email: rory.taylor@competition-commission.gsi.gov.uk).

6.      Further information on the CC and its procedures, including its policy
on the provision of information and the disclosure of evidence and merger
references can be obtained from its web site at:
www.competition-commission.org.uk.




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