Third parties in retail markets

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Client Office of Rail Regulation (ORR)
Dates 2014
Service(s)Policy & Economics, Regulation & Competition, Review & Evaluation

CEPA conducted a comparative analysis of third parties in retail markets outside rail, with a focus on governance and institutions within these markets and regulatory and consumer issues arising in rail retailing.

The Department for Transport (DfT) was reviewing fares and ticketing in rail and other industries, and was keen to achieve a level playing field for retailers in the rail industry, where some parts of the industry at present could be seen as hindering competition and innovation in the retailing of tickets. ORR therefore sought, for comparison, a better understanding of how third parties work in the selling of tickets in other retail markets with similar issues.

CEPA developed a series of case studies to provide an analysis of the selling of tickets in five alternative markets, and how the arrangements in these markets may be relevant for the future of rail retail. These markets were chosen following consultation with ORR and research of a wide range of markets, looking at regulated sectors that retail to consumers and with similarities to retailing activity taking place in rail.

The markets of interest were: air travel, energy, retail investments, mobile telephony, and price comparison websites. To assist this analysis CEPA engaged with various industry experts, including regulators, from these markets, followed by a presentation of our findings to various rail industry stakeholders. CEPA delivered a final report based on our findings, which was published by ORR and is available on their consultation page.

The case study markets were compared with the rail sector on the degree of competition, with a wider range of options for basis supply in these sectors than in rail, with unbundling of the supply chain in the comparator markets allowance distinct offers at distinct prices to provide competition with basic suppliers.

The purpose of this analysis included lesson learning on how potential market restructuring could take place in the rail sector to better facilitate competition, and whether price controls should be applied to every route or limited to essential services.