UK Regulator Has Competition Concerns Over FirstGroup Franchise

Competition on FirstGroup PLC's (FGP.LN) Great Western Railway could be reduced following the rail company's award of the new South Western franchise, the U.K. Competition and Markets Authority Tuesday said.

The regulator said it is seeking remedies from FirstGroup and its partner MTR Corp. Ltd. (0066.HK) in order to avoid an in-depth phase 2 investigation.

The CMA has been investigating the award of the franchise to FirstGroup and MTR since May, and concluded that there are no competition concerns on the vast majority of routes it would operate.

The CMA said it is concerned that FirstGroup having control of both services could reduce competition on the route, leading to higher fares or worse service for passengers.

The CMA's decision comes in advance of the start of the franchise, due on Aug. 20.

FirstGroup shares at 0820 GMT down 0.9 pence, or 0.7%, at 120.20 pence.

-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749

(END) Dow Jones Newswires

July 11, 2017 04:48 ET (08:48 GMT)