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CP asks US prosecutors to check legality of rail rivals blocking NS take-over

CANADIAN Pacific has asked the US Department of Justice to review recent actions by a number of major US railways, which say they are organising a campaign to block mergers in the rail sector.

CP calls on the Department of Justice to examine antitrust implications, if major rivals are organising to block a new entrant from enhancing competition in the US rail sector.

CP expressed confidence in the Surface Transportation Board and its regulatory process to analyse CP's proposal impartially once an application is filed.

It is further disappointed that others appear not to share such confidence and have resorted to collective action to ensure no merger occurs.

"The fact that these major railroads have joined to work so feverishly against CP's proposal speaks volumes about their concerns regarding the impact the transaction would have on their competitive position.

In fact, one CEO was quoted as saying that the merger 'could actually be destructive of [their] shareholder value', and another CEO publicly opined that a CP/Norfolk Southern merger "would make it hard for . . . CSX to survive alone."

"Whether or not that latter statement is accurate, it really illustrates the level of enhanced competition these other railroads fear from a CP-Norfolk Southern merger.

"The collective communication strategy of these competitor railroads is also likely illegal because it is anticompetitive: it is an agreement to collectively work together to prohibit the introduction of competition by a new competitor, which is akin to a group boycott in principle and intended effect.