The Office of Rail and Road (ORR) has completed its market study into the provision of railway station catering services. We have decided not to refer the market to the Competition and Markets Authority (CMA) and we have instead set out a package of remedies to address the issues we have identified in this market.
December 2024 update
13 December 2024
On 13 December 2024, we published an open letter to station operators and railway station catering providers. This letter follows our call for responses to our final report, published on 12 June 2024.
Clarification on Tendering Recommendations
We believe that if station operators implement all the changes they have committed to, we will see a significant increase in tendering rates. While we do not consider there to be an ideal rate of tendering, the rate at some stations is as much as 20% and evidence from experts suggests tendering rates are much higher in equivalent markets. We consider a rate of at least 10% is achievable. Maximum benefits will be delivered by tendering prime units that have been occupied by the same tenant for extended periods.
Government’s Rail Reform Agenda
We believe there are steps that can be taken in the short term, without waiting for rail reform, that will benefit consumers. We are concerned that if opportunities to generate competition from tendering units approaching the end of their term in the coming years are not taken, restrictions on effective competition will last beyond the creation of Great British Railways (GBR). We also expect GBR to continue implementing the remedies from the market study that fall within its remit.
Engagement with the Department for Transport (DfT)
We have actively engaged with DfT since the publication of our recommendations and final report in June 2024. We welcome DfT’s recognition of our work and its agreement to continue working with us to ensure the market for railway catering provision works for passengers, providing them with choice and value for money.
Next steps
We will continue to monitor progress in this market. Our monitoring activities will likely include periodic meetings with recipients of our recommendations and the publication of an update report outlining the progress made on implementation and market impact.
Recommendations and final report
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12 June 2024
On 12 June 2024, we published our final report of the market study on the railway station catering market. This report sets out the issues which are adversely affecting the market in delivering value for money for passengers and taxpayers. It confirms the reasoning of our initial decision not to refer the market to the CMA for a market investigation. It outlines a series of recommendations which will help ensure that these issues are appropriately addressed.
Our final report includes:
- Requiring a greater focus on passengers’ satisfaction and requirements of catering by using more consumer research, to provide an offer at stations that meets customer needs;
- A presumption in favour of competitive tendering of outlets for leases which are due to expire;
- Simplifying and standardising contracts to make it easier for new entrants to the market;
- Ensuring station operators contract out of the 1954 Landlord and Tenant Act for new leases of outlets at stations, whenever possible; and engage with the Law Commission’s upcoming consultation on amendments to the Act to reform protected leases;
- A greater degree of strategic direction and support to station operators by public funders.
Decision not to refer the market and interim report
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12 December 2023
Decision to not make a Market Investigation Reference (MIR)
We decided to not refer the railway station catering market for investigation. We published the notice of our decision. Our reasons for not referring this market to the Competition and Markets Authority (CMA) are set out in the interim report.
Interim report
The interim report contains:
- our emerging findings on the functioning of the railway station catering market
- our reasons for not referring this market to the Competition and Markets Authority (CMA)
- our proposed approach to address the concerns we have identified
We invited comments on our main areas of concern and on the proposed actions we identified by 26 January 2024. We carefully considered these responses and they have informed our final report.
Launch of market study
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16 June 2023
We launched a market study into the provision of railway station catering services.
A good railway station catering experience can impact the wider travel experience. Consumers benefit when there is:
- value for money
- competition between retailers
- convenience
- choice
- quality products
- price-competition
- customer service
We invited comments on our proposed approach and areas of focus set out in the statement of scope from interested parties by 7 July 2023.
Timeline
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- 16 June 2023: Launch.
- 7 July 2023: Deadline for responses to the Statement of Scope.
- 15 December 2023: Statutory deadline for publishing notice regarding decision on whether to make a Market Investigation Reference (MIR).
- 26 January 2024: Deadline for comments on the Interim Report.
- 15 June 2024: Statutory deadline for publishing the final report setting out our findings and our reasoning on any action which we propose to take.