The franchise is awarded by the government

The Office of Fair Trading asked the commission to consider if any of the proposals, if successful, would lead to a "substantial" drop in competition.

A report on the bids - from First Group, Stagecoach and National Express - is expected by March 2006.

A commission spokesman said: "This is the fifth train franchise referral in the last two and a half years."

He added: "We will talk to all three parties and interested parties like passenger groups, plus we will get surveys done from transport consultants.

Each referral costs hundreds of thousands of pounds to us and the taxpayer First Group

"We can clear a bid, or we can suggest remedies, like asking for conditions to be introduced so a company is not diverting passengers from bus to rail, for example."

First said it was "disappointed" by the referral.

"We have always argued that with some 90% of journeys made by road, our main competition is the car not other operators," a spokesman said.

"Each referral costs hundreds of thousands of pounds to us and the taxpayer and diverts valuable management time from service performance."

Seven-year franchise

A spokeswoman for South West Trains, on behalf of Stagecoach, said she hoped the commission would find no conflict of interests.

National Express was unavailable for comment.

The decision to award the seven-year franchise will be made by the Department for Transport.

The winner will operate long-distance, regional and local services in the Thames Valley, Cotswolds, Bristol and the surrounding area and the West of England with some cross-border services into South Wales.