Rail Regulator publishes on-track competition policy

18 May 2004
ORR/12/04

The Rail Regulator, Tom Winsor, has today published a policy statement on the extent of protection from on-track competition that might be afforded in the track access contracts of passenger train operators (known as moderation of competition).  The statement follows previous consultations with the industry, most recently in July 2003.  There have been no major policy changes since July 2003, although today’s policy statement does clarify a number of points.

Tom Winsor said:

“Moderation of competition raises some difficult policy questions about the costs and benefits of allowing competition in a market like the railways, where almost all passenger train operators operate under franchises with the public sector and where access to the network is necessarily constrained.  In what circumstances should an operator be given contractual protection from on-rail competition to facilitate investment?  Should new services be approved where they would compete with existing services, given the implications for the revenue of incumbent operators and, ultimately, the budget of the Strategic Rail Authority or other funders?  My policy statement today explains how I intend to approach such questions.

“There will inevitably be some difficult decisions to take, both for me and for my successors, the Office of Rail Regulation.  Our statutory objectives in section 4 of the Railways Act 1993 will not all point in the same direction and conflicting objectives will need to be balanced one against another.  However, I believe that the document I am publishing today sets out a clear framework within which such decisions will be taken in the public interest and provides valuable guidance which will assure operators, funders and others in important respects.”

The policy statement deals with two broad scenarios.  First, it sets out the circumstances in which the Regulator expects to approve contractual protection for a train operator where restricting or preventing future new competing services is important in order to facilitate investment.  The Regulator expects such cases to be very much the exception.  Second, it explains how the Regulator intends to deal with applications for rights to run new competing services where incumbent operators have no such contractual protection.

Notes to Editors:

1. Moderation of competition: final conclusions is also available from the ORR Librarian, Sue MacSwan, 1 Waterhouse Square, 138-142 Holborn, London EC1N 2TQ, tel: 020 7282 2001, fax: 020 7282 2045, e-mail: rail.library@orr.gsi.gov.uk.
2. The last consultation on this subject was Changes to access rights and moderation of competition: draft conclusions, Office of the Rail Regulator, London, July 2003, also available from the ORR Librarian.

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