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April 6, 2009updated 12 Apr 2017 4:40pm

CC rules Roscos restrict choice

Britain's Roscos have been told by the Competition Commission (CC) to provide more information when negotiating lease rentals.

By Brendan Malkin

Britain’s Roscos have been told by the Competition Commission (CC) to provide more information when negotiating lease rentals.

They must now give “a set list of information” to train operating companies in order to give them more “ability to negotiate more effectively”, according to a 199-page report by the CC published today into the market for leasing rolling stock for franchised passenger services.

The report, which said that operators have “little incentive or ability to negotiate” with Roscos, also concluded that technical and operating factors, as well as costs associated with switching rolling stock have meant that there has been a restriction in the “choice of rolling stock available”.

The CC now also requires Roscos to offer different terms in their lease contracts. To date, these have not been available because of “non-discrimination terms” in their code of practice which have meant, in effect, all Roscos have offered the same deal package to customers. As a result, operators “have little incentive to seek better terms as its rivals will also receive the same benefit”.

Diana Guy, who chaired the CC’s inquiry, said: “There is frequently little competition when existing stock comes up for re-leasing.”

This, she added, “stems from the lack of alternatives to the incumbent fleets when operators are putting together their franchise bids”.

The CC also recommended that franchises should be lengthened to up to 15 years “or longer” so operators can benefit from switching to rolling stock “over a longer period”, and also that a choice of rolling stock are provided in invitations to tender.

The report called for franchising authorities to make assessments as to whether Roscos can offer stock “beyond the franchise term and across other franchises” when evaluating franchise bids.

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