Shares in Trainline PLC fell 14% to 208.4p on Wednesday. This drop followed an investigation launched by the UK's Competition and Markets Authority (CMA) into the company's pricing practices. The CMA is looking into whether Trainline used 'drip pricing.' This is when mandatory charges are revealed later in the buying process instead of in the initial price.
Key Details
The CMA's investigation will check if all mandatory fees are shown upfront when customers buy train and coach tickets through Trainline's app and website. The regulator noted that it found transaction fees ranging from 50p to £2.79 for train bookings and a £1.50 fee for coach journeys. The CMA said these practices could mislead consumers and hurt competition. Companies using drip pricing may seem cheaper than their competitors.
Background
Trainline has said it is committed to clear pricing and has been in talks with the CMA for several months. A company spokesperson stated, "We’ve proactively engaged with the CMA… and we are taking proactive steps to enhance how certain fees are presented to our customers." The CMA's investigation is part of a larger effort targeting misleading pricing practices in various sectors. This includes probes into Virgin Atlantic and Red Driving School for similar issues.
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The investigation could lead to more scrutiny of Trainline's pricing strategies. This may affect its market position and share price. Investors may respond to any findings that could result in financial penalties or require changes to Trainline's pricing structure. Keep an eye out for updates from the CMA about the outcome of this investigation and what it means for Trainline's operations.
Based on reporting by: proactiveinvestors.co.uk, standard.co.uk