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Railhub Archive
2006-05-22 GNE-001


GNER takes Office of Rail Regulation to court

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Grand Central
Office of Rail Regulation
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GNER takes Office of Rail Regulation to court

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22 May 2006
source GNER
type Press release

GNER has today issued proceedings for judicial review against the Office of Rail Regulation (ORR) in relation to its decision to award access rights to Grand Central Railway Company Limited (GCR) to operate passenger train services in direct competition with GNER on the East Coast Main Line.

GNER is challenging the ORR’s Decision of 23rd March 2006 (the detailed reasons for which were published on 6th April 2006) (“the Decision”) on the basis that it is discriminatory, amounts to an unlawful grant of state aid, is a distortion of competition and is in contravention of European Community and national law.

An application to the High Court has also been made for expedition and it is hoped that the judicial review hearing will take place this July.

GNER believes the ORR’s Decision is unlawful and creates unfair competition, in that Grand Central Railway would not pay either the fixed track access charges or premium payments that GNER pays under its publicly-specified franchise contract, which was awarded by Government after long and costly competition. If GCR was to compete on equal terms it would need to pay around £6 million a year (£2 million per train), the same pro-rata costs that GNER incurs.

GNER also challenges the need for GCR to stop at York, which is already served by 61 trains a day to and from London, when GCR’s stated goal is to create a new rail market between Sunderland and London.

A GNER spokesman said: “We welcome competition as it encourages us to keep improving, but competition should be on a level playing field”.


Notes to Editors:

In relation to paragraph 2 above:

(i) The Decision is discriminatory as the differential charging regime that will be implemented by the Decision is discriminatory and is in contravention of EC Directive 2001/14 and the Railways Infrastructure (Access and Management) Regulations 2005 (SI 2005/3050), which implement the Directive.

(ii) The Decision amounts to an unlawful grant of state aid under Articles 87 and 88 of the EC Treaty.

(iii) The Decision is a distortion of competition and is in contravention of European Community law as it is contrary to Articles 3(1)(g), 10, 82 and 86(1) of the EC Treaty.

(iv) By virtue of the above, the ORR has acted in breach of its statutory duties under section 4 of the Railways Act 1993 (as amended) (and thereby in breach of national law) in reaching the Decision.


Instead of granting GNER permission to run 12 extra Leeds-London services (a franchise commitment) from available scarce track capacity, the Decision authorised GCR initially to run three return services between Sunderland and London. The potential of the Sunderland-London market had previously been investigated in 2004/5 by the Strategic Rail Authority and all four bidders for the new Inter-City East Coast franchise. No self-funding business case could be found.

GNER estimates that GCR’s business case is based on at least 80 per cent revenue abstraction from franchised operators. Under an industry revenue allocation system, simply by stopping at York, GCR would abstract £5 million a year, regardless of the quality of service or numbers of people travelling with GCR.

Railhub Archive ::: 2006-05-22 GNE-001


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