Price warning on rail
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by Karen Miles • The Rail Regulator has said the privatisation of British Rail's three trainload freight companies could lead to higher prices.
This week final bids are due in for the newly named Mainline, Loadhaul and Transrail companies, with a single owner a strong possibility.
Regulator John Swift has told the Government and BR he will not block any sell-off to a single bidder, but he will want greater powers if it happens. He is also asking the bidders to give him "suitable assurances" on their behaviour if they take over all three companies.
"He has concerns that common ownership without additional regulatory safeguards might not yield the appropriate benefits or protection for users," says a Swift spokesman.
The regulator's warning suggests privati sat ion might not increase competi tion or reduce rail freight prices, which could be good news for hauliers.
Up to five bidders are expected to bid for the three businesses, which have a combined turnover of £575m and profits of £73m. US-based Wisconsin Central's bid for the three companies has prompted the three management buy-out teams to put in offers for all three companies alongside their single-company bids. Another US rail company, Omnitrax, is also believed to be bidding for all three, as well as for just one company.
The Rail Freight Group, representing users, is supporting the regulator's move. Director Julia Clarke says: "With a monopoly rail freight supplier, as it stands, the regulator will hardly have any power at ail. The operator will be in a position to make monopoly profits."