CP Rail accuses rivals of colluding to fight merger with Norfolk Southern

MONTREAL -- Canadian Pacific Railway has asked the U.S. Department of Justice to get involved in its battle to acquire Norfolk Southern.

See Full Article

The Calgary-based railway wants U.S. antitrust authorities to conduct a review of what it alleges is an illegal co-ordinated effort by major U.S. railroads to block industry consolidation, including its proposed takeover of the Virginia rail company.

It cited news reports in which those railways said they were concerned about the damage the merger -- which would create the largest railway in North America -- would have on their profitability and shareholder value.

"We are deeply concerned that these actions are being taken for the primary purpose of restraining trade ... and not for any legitimate purpose that would benefit the public or enhance competition in the U.S. railroad industry," said the letter signed by lawyers for Canadian Pacific.

Canadian Pacific (TSX:CP) has been repeatedly rebuffed by Norfolk Southern since making a cash and stock offer worth US$28 billion in November, which it later sweetened to between US$37 billion and US$42 billion.

The railway says the merger would enhance competition and improve rail efficiencies for customers.

However, it alleges that several large U.S. railways have responded by working together though "a widespread campaign of meetings and solicitations with customers, the media and other interested parties."

Approval from the U.S. Surface Transportation Board is required for any merger. The agency has yet to receive a formal proposal but has posted on its website more than 30 letters from politicians and customers opposing the deal.

Matt Rose, chairman of BNSF Railway headquartered in Fort Worth, Texas, has been quoted in a Reuters article as saying the merger would make it hard for Florida railway company CSX to survive.

CSX said it opposes the merger while Union Pacific CEO Lance Fritz said his company was working behind the scenes to ensure no mergers take place.

While Canadian Pacific said its competitors have good reason to be concerned about a merger, "fear of competition does not justify the collective action of competitors."

Canadian Pacific said it believes the strategy by the U.S. railway companies is likely illegal because it is anti-competitive and akin to a group boycott.

CSX declined to comment but Union Pacific and BNSF defended their actions.

"We have communicated with other railroads for the purpose of petitioning the government," Union Pacific spokesman Aaron Hunt said in an email. "We oppose this merger and we are prepared to discuss our views with the government."

BNSF spokesman Michael Trevino said all of the company's actions and comments have come after consulting with counsel and have been done according to the law.

The U.S. Justice Department declined to comment on the Canadian Pacific letter and wouldn't say if it will launch a review.



Advertisements

Latest Economic News

  • Coca-Cola CEO Muhtar Kent to step down next year

    Economic CTV News
    NEW YORK -- Coca-Cola said Friday that CEO Muhtar Kent will step down as CEO next year and be replaced by Chief Operating Officer James Quincey. The world's largest beverage maker is under pressure to grow as people around the world drink less soda, including its flagship Coke. Source
  • U.S. airlines may soon let you talk on your cellphone in flight

    Economic CBC News
    Airlines could let passengers make in-flight phone calls using Wi-Fi under a proposal from federal regulators. Flight attendants and others have complained that the calls could be disruptive. But the Department of Transportation said Thursday that it envisioned allowing the calls if airlines tell all customers about the policy when they buy their tickets. Source
  • Tribes suing over Dakota Access pipeline willing to put claims on hold

    Economic CTV News
    BISMARCK, N.D. -- Two Sioux tribes suing over the Dakota Access pipeline say they're willing to put their claims on hold while the Army considers whether to allow the pipeline to cross under a Missouri River reservoir in North Dakota. Source
  • Japan ratifies Pacific trade pact despite Trump plans to withdraw U.S.

    Economic CTV News
    TOKYO -- Japanese Prime Minister Shinzo Abe won parliamentary approval Friday for ratification of the Trans-Pacific Partnership, despite U.S. President-elect Donald Trump's plan to withdraw from the 12-nation trade pact. Upper house lawmakers approved the TPP on Friday, heeding Abe's calls to push ahead with it despite Trump's rejection of the free-trade initiative championed by President Barack Obama. Source
  • Asian shares stumble as European Central Bank rally fades

    Economic CTV News
    KUALA LUMPUR, Malaysia - Asian shares meandered Friday as an overnight rally in U.S. markets helped by the European Central Bank's decision to extend its bond-buying economic stimulus program faded. South Korea's benchmark slipped as lawmakers prepared to vote on whether or not to impeach President Park Geun-hye. Source
  • Global stocks extend European stimulus-inspired rally

    Economic CTV News
    KUALA LUMPUR, Malaysia -- Global stocks continued to rise Friday as investors remained buoyed by the European Central Bank's decision to extend its bond-buying economic stimulus program. South Korea's benchmark slipped as lawmakers voted to impeach President Park Geun-hye over a corruption scandal. Source
  • Sales, profit at Sears in U.S. continue to decline

    Economic CTV News
    HOFFMAN ESTATES, Ill. -- Sears, the one-time standard bearer for U.S. retail, has posted quarterly losses for more than a year now, and sales continue to slide as the company shutters poorly performing stores. The company's cash situation, which has led in the past to clashes with suppliers, is an ongoing concern. Source
  • Stock markets in New York hit new record highs

    Economic CBC News
    Major stock markets in New York closed at record highs Thursday amid a broad rally from banks, materials and technology companies. The Dow Jones industrial average advanced 65.19 points at 19,614.81, while the S&P 500 added 4.84 points at 2,246.19, both hitting all-time highs for a second day in a row. Source
  • BlackBerry launches new security platform to help companies manage connectivity

    Economic CTV News
    WATERLOO, Ont. - BlackBerry revealed its latest security offering on Thursday intended to help companies reliably manage their current and future connectivity needs. The company's new platform, BlackBerry Secure, is designed to help businesses keep tabs on all their devices to transmit sensitive data to keep people, information and goods safe. Source
  • NHL won't change name of Vegas Golden Knights despite trademark denial

    Economic CBC News
    The National Hockey League says it won't change the name or logo of its newest club, despite being denied a trademark by U.S. authorities. Just a couple of weeks after the Vegas Golden Knights revealed their name, logo and team colours, the U.S. Source