UK: The Office of Rail & Road says it intends to take action to improve competition in the signalling market, with Network Rail’s Digital Railway programme presenting an opportunity to diversify the supply chain, drive innovation and provide better value.

Last November ORR launched a study of the signalling market, which is due for completion by November 10. Issuing a mid-point update on May 11, the regulator raised concerns that the two main suppliers, Siemens and Alstom, had a projected 90% market share in 2019-24. ORR said the two firms benefited from significant incumbency advantages, with 97% of post-1990 interlockings having been installed by Siemens, Alstom or one of their predecessor companies.

ORR felt that this reduced the incentives for new suppliers to make the investment necessary to be competitive in the market. Potential alternative suppliers had indicated that it was difficult to establish a business case to compete for framework contracts or develop technology without a long-term pipeline of work through which the investment could be recouped.

ORR is concerned that these issues could be carried through to the roll-out of alternative signalling technologies. It is therefore challenging the industry to tackle the barriers to competition which it has identified.

ORR believes that an appropriate resolution will be most effectively achieved by engagement with Network Rail and industry. This will be undertaken in Phase 2 of the market study, which will look at the ‘overlapping and interrelated’ barriers on the supplier and buyer side.

Possible actions that ORR may ultimately take range from influencing and making recommendations, through to introducing new licence conditions.

‘There are no quick fixes to address these problems, but we are committed to challenging industry to seize the opportunity of the rollout of new approaches to signalling to diversify the supply chain, and ensure Network Rail is able to drive value and innovation from its suppliers’, said ORR Chief Executive John Larkinson.