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Competition watchdog CMA could accept undertakings for West Coast rail franchise probe

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By Reuters

(Reuters) – Britain’s competition watchdog said on Friday it could accept undertakings offered by FirstGroup Plc <FGP.L> and Italy’s TrenItalia as it investigates the award of the West Coast Partnership rail franchise to the companies.

Units TrenItalia UK and First Rail secured the British rail franchise that links London, Manchester and Glasgow in August.

FirstGroup is already involved with the Great Western, South Western and TransPennine Express franchises.

The investigation by the Competition and Markets Authority (CMA) followed a decision by the European Commission to refer the case to the United Kingdom.

“(CMA) considers that there are reasonable grounds for believing that the undertaking offered, or a modified version of it, might be accepted by the CMA to remedy the substantial lessening of competition identified by the CMA,” the watchdog said in a statement.

The CMA now has until Jan. 21 to decide whether to accept the undertaking, with the possibility to extend the time frame to March 17. It did not give details of the undertakings in its statement.

The award of the West Coast Mainline contract to a joint venture, 70% owned by FirstGroup and 30% by TrenItalia, marked the end of Richard Branson’s Virgin Group involvement with Britain’s railways after more than 20 years.

Virgin’s West Coast partner Stagecoach <SGC.L> was disqualified from bidding for the new contract after it did not comply with rules over pension funding. It has challenged the bar.

FirstGroup did not immediately respond to a request for comment, while TrenItalia was not immediately available for comment.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Subhranshu Sahu)