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Last Updated: Tuesday, 13 January, 2004, 20:38 GMT
ScotRail bid hits the buffers
First Group's bid to run ScotRail has gone off the rails
A Scottish bus company bidding to run Scotland's railways has been reported to the Competition Commission.

First Group has been referred by the Office of Fair Trading (OFT) over fears consumers could lose out if the firm wins the ScotRail contract.

The company could be barred from the bid paving the way for current franchise holders National Express and Arriva to fight it out.

The commission will make its ruling on First Group by 28 June.

The OFT said significant concern had been raised about the group's franchise bid.

First Impressions

It has been suggested the merger of two big Scottish transport firms, in the form of First Group and ScotRail, could reduce consumer choice on services and lessen competition.

OFT chairman John Vickers said: "The evidence currently available is not sufficient for the OFT to be able confidently to reject the view and therefore the OFT has decided to refer this merger to the Competition Commission."

First Group said the move was "extremely disappointing", both for the company and passengers and it would now consider whether to continue with the bid.

The Aberdeen-based company carries 186 million passengers a year on its 1,700 buses in its hometown, Edinburgh and Glasgow but does not currently run any trains north of the border.

It already owns rail companies First Great Western, First Great Eastern and First North Western in England and Wales and promised better integration of rail and bus links if it won the Scottish contract.

Plans Derailed

The company will take the next few days to consider whether to continue with the bid as it will now be subject to significant delays until a decision is made by the commission.

Chief executive Moir Lockhead said: "This is extremely disappointing news not just for us but for passengers too.

"Passengers, operators and transport ministers all want to see joined up transport.

"Journeys do not start and finish at the railway station.

"Other government departments must work together to make this happen."

On The Right Track

First Group submitted its bid for the seven-year ScotRail contract alongside National Express and Arriva in October.

The Strategic Rail Authority will judge the applications on plans for improvements to services and value for money.

National Express, which has held the Scottish rail franchise since ScotRail was privatised in 1997, considers itself the favourite to win.

The contract will attract government subsidy of over 200m a year, more than 10p for every kilometre travelled by each ScotRail passenger.

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