THE RAIL Regulator this week warned that the new Competition Act will open the way for it to carry out 'dawn raids' on rail companies suspected of anti-competitive business practices.
The Europe-derived legislation came into force yesterday and will apply across all industries in the UK. But insiders said its impact on railways would be among the most significant.
The act prohibits the abuse of a dominant market position and agreements between companies that distort competition. But it will also give much more power to Rail Regulator Tom Winsor.
The Regulator's jurisdiction covers the previously unregulated rail industry supply chain. Until now, the ORR has only had responsibility for Railtrack and the train operating companies.
But an ORR source said: 'Anything in the railways is now covered by the ORR. There are two obvious areas where the act will apply to railways - if Railtrack was abusing its dominant position as virtually the sole buyer of rail infrastructure, and the flipside where three renewals firms form a cartel to fix prices.'
He added: 'The Regulator has the power to do dawn raids either in relation to a complaint or under its own initiative. It will be able to go through computers and files.'
One consultant said Railtrack would face severe scrutiny: 'I think sooner or later this will blow a hole in Railtrack's bad practices. Anything collusive could be deemed anti-competitive.'
He added that some of its new alliancing agreements could be anti-competitive and could amount to Railtrack controlling production.