pounds 50m Jarvis rail deal under fire

A pounds 55m deal by Jarvis, the Essex construction group, to buy two privatised railway track renewals companies (TRCs) is facing a barrage of complaints from rivals, which are pushing for an investigation by the Monopolies and Mergers Commission.

At least one other construction company, which also bought into the privatised rail business, has urged the Office of Fair Trading to block the deal on competition grounds. One complaint, understood to be from Amey, the Oxfordshire construction company, argued the consolidation would restrict the leasing market for heavy plant and machinery.

The two acquisitions by Jarvis would give the company control over four of the six track renewals companies. Jarvis is paying pounds 50m for Fastline, formed from a management buyout of Eastern TRC, which later bought Northern TRC.

A separate deal involves paying pounds 5m for the 50 per cent of another company, Relayfast, which Jarvis does not already own.

Relayfast is responsible for Western and Scotland TRCs. Jarvis transformed itself in one year from a loss-making construction group after buying Northern Infrastructure Maintenance Company, one of seven maintenance businesses (IMCs) hived off from the old British Rail.

An MMC reference would postpone the latest round of windfalls for former British Rail managers. David Doggett, Fastline's managing director, would see his pounds 50,000 investment turned into pounds 2.6m in cash and shares on completion of the takeover.

The row is over the spoils of pounds 1bn worth of Railtrack contracts for track renewals and maintenance work. The complaint alleges that Jarvis has indicated it would double charges for leasing some specialist machinery such as machines to compact ballast under rail sleepers.

Paris Moayedi, Jarvis chairman, described the allegations that plant hire prices would double as "absolute nonsense".