TRANSPORT group Arriva lost out on the Scottish rail network franchise to rival FirstGroup yesterday.

FirstGroup, which had been named preferred bidder for the franchise, was confirmed as the new operator of Scotrail in a £1.9bn deal.

The deal makes the company the largest public transport operator in Scotland.

The company won the contract despite a report by the Competition Commission which said the move would result in higher fares and poorer services, a judgement that had given hope to Arriva.

Arriva has, however, completed the acquisition of Danish company Wulff Bus for £10.3m. Wulff operates city and regional bus services, with about 600 employees and a fleet of 300 vehicles.