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CP wants DOJ to investigate ‘campaign’ to block NS takeover bid

Canadian Pacific on Tuesday asked the U.S. Justice Department to investigate what it says is a concerted effort by the other Class I railroads to block its attempt to purchase number four U.S. railroad Norfolk Southern.

   Canadian Pacific on Tuesday asked the U.S. Justice Department to investigate what it says is a “collective campaign” by North America’s other Class I railroads to block its attempt to take over Norfolk Southern. 
   CP’s move to bring federal investigators into the mix has raised the stakes in what has become an extremely public war of words between the Canadian railroad, Norfolk Southern and the continent’s other large railroads.
   CP called its request to the Justice Department “unfortunate,” but “ultimately concluded the unprecedented action of major competitors organizing to block a new entrant from enhancing competition to the U.S. merited the attention of the antitrust authorities.”
   The Canadian railroad first proposed its desire to take over NS in November, which the Norfolk, Va.-based railroad has since repeatedly resisted. Other railroads, including BSNF, Union Pacific and CSX, have also voiced their concerns with the proposed CP-NS combination in the media. 
   “We are deeply concerned that these actions are being taken for the primary purpose of restraining trade in violation of Section 1 of the Sherman Act, and not for any legitimate purpose that would benefit the public or enhance competition in the U.S. railroad industry,” wrote CP’s attorney Matthew J. Reilly in a letter to the heads of the Justice Department’s Antitrust Division.  
   Reilly added that the other Class I railroads’ reaction to CP’s proposal “illustrates the level of enhanced competition these other railroads fear from a CP/Norfolk Southern merger. 
   “They are — with good reason — concerned that the proposed Norfolk Southern acquisition will lead to a more competitive industry: with the combined efficiencies, cost-savings, and the upgraded competitive advantages, the combined companies will be much better positioned to price competitively, improve service quality, and create the type of competitive environment that CP’s competitors are afraid of,” he said.

Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.