Rolling stock leasing market investigation: provisional findings report

The very limited number of rolling stock options available to train operating companies (TOCs) when bidding for rail passenger franchises is restricting competition in the market for the leasing of rolling stock. This is the conclusion reached by the Competition Commission (CC) in its provisional findings on the market for the leasing of rolling stock for franchised passenger services. In the report the CC has provisionally found that a lack of rivalry results from the interaction of several factors which restrict choice or the ability of TOCs to exercise choice when it comes to leasing vehicles from the rolling stock companies (ROSCOs). These include the shortage of vehicles available for lease at the point franchises are being let, technical and operational factors which limit interoperability, and costs and risks in switching rolling stock or introducing new rolling stock. This lack of choice is reinforced by the way in which the franchising system currently operates which restricts opportunities for competition and in some cases is applied in ways that further constrain choice. Given the adverse effect on competition which the CC has found, the CC is required under the Enterprise Act to consider remedies and has also published a notice of possible remedies. The majority of the remedies being considered involve recommendations to the Department for Transport (DfT) to introduce a greater degree of flexibility, where appropriate, in the franchising system or the procurement of leased rolling stock with the objective ofachieving a greater degree of choice in rolling stock for train operators.