The Office of Rail Regulation (ORR) announced on 26 April 2007 its decision to refer the leasing of rolling stock for franchised passenger rail services to the Competition Commission (CC) for further investigation.

In November 2006, the ORR consulted publicly on its proposal to make a reference. The ORR noted that the consultation responses have not altered its views that certain features of the rolling stock leasing market are limiting competition and could be leading to higher prices and poorer service. It believes the key issue is a lack of liquidity in the market and that this arises from inherent features of the market and also from the franchising process.

The ORR has stated that it believes a CC reference is appropriate given the size and importance of the rolling stock leasing market to the UK rail industry, which accounts for around £1 billion a year of costs.

The CC has a maximum of two years in which to investigate and report on this market.

The Department for Transport (DfT) had announced plans last month to initiate the procurement of a fleet of between 500 and 2,000 intercity trains, to be provided to Train Operating Companies by way of a 30 year availability and reliability agreement.

The timetable for the procurement envisages the issue of invitations to tender to selected consortia (of train manufacturers, train maintenance companies, financiers and potentially train maintenance depot developers) in Autumn 2007, with the contract to be awarded in Winter 2008/2009 – though the CC reference may well affect the timing for this programme. DfT has reserved the right to run a funding competition for the financing of the project.

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The original publication date for this article was 27/04/2007.