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Brussels, 09 December 2003

Commission clears northern England train JV between FirstGroup and Keolis

The European Commission has approved under the Merger Regulation the creation by FirstGroup plc (United Kingdom) and Keolis (France) of Trans-Pennine Express JV, which will operate a train service between Liverpool, Manchester, Newcastle and other towns in the north of England.

The new Trans-Pennine Express franchise will link Liverpool and Manchester with Leeds, York and Newcastle and other key cities and towns in the region. Last July, the UK Strategic Rail Authority, the competent national authority for the procurement of railway passenger services in Great Britain, announced that it had selected TPE JV as the preferred bidder following a public tender procedure. The contract will run for eight years with the option to extend it for a further five years.

The operation of trains in Britain is subject to an open and competitive bidding process. The other short-listed bidders for TPE - namely Arriva, Connex and Serco Rail - and the other companies already running passenger trains under franchise in Britain together account for more than two thirds of the total market, whether measured in terms of passenger kilometres or volume.

FirstGroup is an UK-based bus and rail passenger transport operator, which also offers services in the USA. In Britain, it already operates three rail franchises: First Great Western, First Great Eastern and First North Western. It also has an interest, via a majority stake in GB Railways Group plc, in two other franchisees, Anglia and Hull trains. In addition, First has a bus network that includes the north of England but even if buses and trains are considered to be in the same product market, the overlaps are not significant.

Keolis has a minority stake in two other franchisees, Thameslink and South Central, both of which provide regulated passenger services under public service contracts due to run until 2009. Keolis is ultimately owned and controlled by the French state railway SNCF and provides passenger transport services in bus, rail and light rail sectors in France, Germany, Denmark, Sweden, UK and Canada.

The present operation does not, therefore, present any competition concerns.

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