COMPLETED ACQUISITION BY RAIL NORTH LIMITED OF THE NORTHERN RAIL FRANCHISE

Interim Order made by the Competition and Markets Authority pursuant to section 81(2) of the Enterprise Act 2002, (the Order)

Whereas:

(a) on 20 May 2016, the Competition and Markets Authority (CMA), in the exercise of its duty under section 22(1) of the Enterprise Act 2002 (the Act), referred the completed acquisition by Limited (ARN), a wholly-owned subsidiary of Arriva plc (Arriva), of the Northern Rail Franchise (the Northern Franchise) for further investigation and report by a Group of CMA Panel Members (Inquiry Group), (the Reference);

(b) the CMA is considering, pursuant to section 35(1) of the Act, whether it is or may be the case that a relevant merger situation has been created and whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition in any market or markets in the United Kingdom (UK);

(c) the CMA wishes to ensure that no action is taken pending final determination of the Reference which might prejudice that Reference or impede the taking of any action by the CMA under Part 3 of the Act which might be justified by the CMA’s Decisions on the Reference;

(d) on 1 April 2016 the CMA served an Initial Enforcement Order on Arriva pursuant to section 72(2) of the Act (the Initial Enforcement Order) for the purpose of ensuring that no action was taken pending final determination of the reference under section 22 of the Act which might prejudice that reference or impede the taking of any action by the CMA under Part 3 of the Act which might be justified by the CMA’s Decisions on the reference;

(e) Pursuant to section 72(6) of the Act, the Initial Enforcement Order of 1 April 2016 will cease to be in force on the date of making of this Order by the CMA pursuant to section 81(2) of the Act; and

(f) the Reference has not been finally determined in accordance with section 79(1) of the Act.

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route, sales and brand identity is maintained including but not limited to the activities pursuant to the Passenger Facing Obligations;

(b) each of the Northern Franchise Business and the Arriva Business is maintained as a going concern and sufficient resources are made available for the development of the Northern Franchise Business and the Arriva Business, on the basis of the bid submitted by ARN for the Northern Franchise, the Franchise Documents, and the pre-merger Business Plan(s) respectively;

(c) there is no integration of the information technology of the Northern Franchise Business or the Arriva Business, and the software and hardware platforms of the Northern Franchise Business shall remain essentially unchanged, except for routine changes and maintenance;

(d) except as permitted by paragraph 8 of this Order, the supplier lists of the Northern Franchise Business and the Arriva Business shall be operated and updated separately and any negotiations with any existing or potential suppliers in relation to the Northern Franchise Business will be carried out by the Northern Franchise Business alone and for the avoidance of doubt the Arriva Business will not negotiate on behalf of the Northern Franchise Business (and vice versa) or enter into any joint agreements with the Northern Franchise Business (and vice versa);

(e) all existing contracts of the Northern Franchise Business and the Arriva Business continue to be serviced by the business to which they were awarded;

(f) no business secrets, know-how, commercially-sensitive information, intellectual property or any other information of a confidential or proprietary nature relating to the Northern Franchise Business shall pass, directly or indirectly, from the Northern Franchise Business (or any of its employees, directors, agents or Affiliates) to the Arriva Business (or any of its employees, directors, agents or Affiliates), except: i) where strictly necessary in the Ordinary Course of Business (for example, where required for compliance with external regulatory and/or accounting obligations), or ii) where strictly necessary for the purposes of any actions contemplated by paragraph 8 of this Order; and on the basis that, should the transaction be prohibited, any records or copies (electronic or otherwise) of such information (including information that has passed vice versa, i.e. from Arriva to the Northern Franchise Business) that have passed, wherever they may be held, will be returned to the business to which they relate and any copies destroyed, to the extent that such destruction is practicable; and

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 operating bus services: Arriva Durham County Limited; limited; Arriva Northumbria Limited; Arriva Tees & District Limited; Limited; and Limited; but, for the purposes of the operative provisions of this Order, excluding the Northern Franchise Business;

‘ Franchise Agreement’ means the Franchise Agreement relating to the services for the carriage of passengers by railways to be provided by Arriva Trains Wales/Trenau Arriva Cymru Limited between (1) The Strategic Rail Authority, (2) Arriva Trains Limited and (3) Arriva Trains Wales/Trenau Arriva Cymru Limited dated 18 October 2003;

‘business’ has the meaning given by section 129(1) and (3) of the Act;

‘Business Plan’ means the Initial Business Plan (as defined in the Franchise Agreement) or any Annual Business Plan (as defined in the Franchise Agreement), as the context requires, to be delivered in accordance with paragraph 2.1 and 2.3 of Schedule 13 (Information and Industry Initiatives) of the Franchise Agreement;

‘Certificate of Commencement’ means the certificate to be issued by the Secretary of State pursuant to the Conditions Precedent Agreement;

‘Commencement Date’ means 1 July 2016;

‘Conditions Precedent Agreement’ means the agreement between the Secretary of State and ARN of the same date as the Franchise Agreement specifying certain conditions to be satisfied or waived by the Secretary of State prior to the issue of a Certificate of Commencement;

‘Control’ includes the ability directly or indirectly to control or materially to influence the policy of a body corporate or the policy of any person in carrying on an enterprise;

‘CrossCountry Trains Franchise Agreement’ means the New Cross Country Franchise Agreement incorporating by reference the National Rail Franchise Terms (Third Edition) between the Secretary of State for Transport and Arriva Trains Cross Country Limited dated 9 July 2007;

‘Decisions’ means the decisions of the CMA on the questions which it is required to answer by virtue of section 35 of the Act;

‘Directions’ means any directions given by the CMA pursuant to this Order.

9

‘Event of Default’ means any of the events set out in paragraph 2 of Schedule 10.3 of the Franchise Agreement;

‘Franchise Agreement’ means the Agreement and the Conditions Precedent Agreement (which together constitute a single agreement which is a “franchise agreement” for the purposes of the Railways Act 1993 and any regulations or orders made thereunder) which was entered into between ARN and the Secretary of State on 22 December 2015;

‘Franchise’ means the rights tendered by the Secretary of State in February 2015 to operate railway passenger services over the routes prescribed in paragraph 2.2 of Schedule 1.6 (Franchise Services) of the Franchise Agreement;

‘Franchise Documents’ means: (a) the Franchise Agreement, Train Service Requirement (as defined in the Franchise Agreement), Funding Deed (as defined in the Franchise Agreement) and Conditions Precedent Agreement; and (b) any other agreement signed by ARN at the time of the award of the Franchise which is in the possession of the Secretary of State and which is notified by the Secretary of State to ARN as being required for publication;

‘Franchise Services’ means such of the Passenger Services (as defined in the Franchise Agreement), the Light Maintenance Services (as defined in the Franchise Agreement), the Station Services (as defined in the Franchise Agreement) and the Ancillary Services (as defined in the Franchise Agreement) as ARN may provide or operate from time to time, including any of such services as ARN may delegate or subcontract or otherwise secure through any other person from time to time in accordance with the Franchise Agreement;

‘Key Personnel’ means those persons identified by ARN in accordance with paragraph 2.1 of Schedule 11 (Agreement Management Provisions) of the Franchise Agreement;

‘Key Staff’ means staff in positions of executive or managerial responsibility and/or whose performance affects the viability of the business (including but not limited to those listed in the Key Contacts List (as defined in the Franchise Agreement));

‘Merger Transaction’ means the Merger Transaction by which ARN and the Northern Franchise Operator have ceased to be distinct within the meaning of section 23 of the Act;

‘Monitoring Trustee’ means the monitoring trustee appointed pursuant to any Directions issued by the CMA pursuant to this Order.

10 

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Northern Franchise, the Franchise Documents, and the pre-merger Business Plan(s) respectively.

(c) There has been no integration of the information technology of the Northern Franchise Business or Arriva Business, and the software and hardware platforms of the Northern Franchise Business have remained essentially unchanged, except for routine changes and maintenance.

(d) Subject to integration which had occurred prior to the Commencement Date, the supplier lists of the Northern Franchise Business and the Arriva Business have been operated and updated separately and any negotiations with any existing or potential suppliers in relation to the Northern Franchise Business have been carried out by the Northern Franchise Business alone and, for the avoidance of doubt, the Arriva Business has not negotiated on behalf of the Northern Franchise Business (and vice versa) or entered into any joint agreements with the Northern Franchise Business (and vice versa).

(e) All existing contracts of the Northern Franchise Business and the Arriva Business have been serviced by the business to which they were awarded, except to the extent novated, assigned or subcontracted prior to the Commencement Date.

(f) Except as permitted by this Order, no business secrets, know-how, commercially-sensitive information, intellectual property or any other information of a confidential or proprietary nature relating to the Northern Franchise Business, has passed, directly or indirectly, from the Northern Franchise Business (or any of its employees, directors, agents or Affiliates) to the Arriva Business (or any of its employees, directors, agents or Affiliates) except i) where strictly necessary in the Ordinary Course of Business (for example, where required for compliance with external regulatory and/or accounting obligations) or ii) where strictly necessary for the purposes of any actions contemplated by paragraph 8 of this Order; and on the basis that, should the transaction be prohibited, any records or copies (electronic or otherwise) of such information (including information that has passed vice versa, i.e. from Arriva to the Northern Franchise Business) that have passed, wherever they may be held, will be returned to the business to which they relate and any copies destroyed to the extent that such destruction is practicable.

(g) Except in the Ordinary Course of Business for the separate operation of the Northern Franchise Business as defined in the Order:

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