Competition Commission market investigation – Rolling stock leasing (Roscos)
The Competition Commission (CC) published its report on rolling stock leasing on 7 April 2009.
In June 2006, the Department for Transport (DfT) requested that the Office of the Rail Regulator (ORR) make a market investigation reference on rolling stock leasing market to the Competition Commission (CC) under section 131 of the Enterprise Act 2002.
The ORR undertook a market study with a view to deciding whether or not to make a market reference and on 26 April 2007 the ORR referred the market to the CC.
The CC published its final report on 7 April 2009.
The CC concluded that competition in the market for the leasing of rolling stock is restricted by the limited number of alternative fleets available to train operating companies (TOCs) when bidding for rail passenger franchises.
The CC identified several factors which in combination have restricted the choice of rolling stock available for lease at the point franchises are being let, including:
- technical and operational factors which limit interoperability
- costs and risks in switching rolling stock or introducing new rolling stock
- aspects of the way in which the franchising system currently operates
The CC said that TOCs have in many cases little incentive or ability to negotiate with rolling stock lessors (ROSCOs) and ROSCOs in turn have little incentive to compete with each other.
The CC made three recommendations to the franchising authorities (DfT and Transport Scotland) regarding franchising arrangements which are aimed at improving competition and choice in the market. The CC will also be requiring the ROSCOs to undertake certain other action using its own powers under the Enterprise Act 2002.
Government responded to the three recommendations made to it in respect of England and Wales in July 2009. The Scottish Government responded separately to the recommendations aimed at Transport Scotland.
