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Friday, December 18, 1998 Published at 15:48 GMT

Business: The Company File

Green light for Stagecoach/Virgin deal

Stagecoach's rail empire keeps rolling on

The UK Government has given train operator Stagecoach the green light for its acquisition of a large stake in rival Virgin Rail.

The deal will bring together two of the most controversial train operators in the country. Both have come under fire from passengers for their poor service.

The £158m deal will consolidate Stagecoach's strong position in the rail market. It now has a string of rail franchises and owns Porterbrook, one of the UK's three major train leasing groups.

All clear

Competition and Consumer Affairs Minister Kim Howells announced he would not refer the deal to Monopolies and Mergers Commission (MMC), the UK competition watchdog.

However the MMC has imposed strict conditions on Stagecoach. It will have to follow tighter rules between Porterbrook and the train operating companies.

Virgin Rail operates the Cross Country and West Coast train franchises. Stagecoach operates the South West trains operation.

Virgin was considering floating its train service on the stock market before Stagecoach offered to buy a 49% stake in the group.

Stagecoach is also one of the largest bus operators in the UK, but has been repeatedly criticised by rivals over the years for its strong arm trading tactics.

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