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

  • United Airlines raising limit on payments to bumped fliers

    Economic CTV News
    DALLAS - United Airlines says it will raise the limit - to $10,000 - on payments to customers who give up seats on oversold flights and will increase training for employees as it deals with fallout from the video of a passenger being violently dragged from his seat. Source
  • United Airlines to offer up to $10K US to bumped passengers

    Economic CBC News
    United Airlines said on Thursday it would offer passengers who volunteer to forfeit their seats on overbooked flights up to $10,000 US as part of the carrier's efforts to repair the damage from the rough removal of a passenger. Source
  • Asian stocks slip as investors monitor Trump tax plan

    Economic CTV News
    HONG KONG - Asian shares slipped Wednesday as investors digested the scant details of President Donald Trump's U.S. tax overhaul, and economic and corporate reports. Investors also were awaiting a policy statement from the Bank of Japan that's expected to provide fresh insights into the state of Asia's second-biggest economy. Source
  • Trump to order probe into aluminum imports

    Economic CTV News
    WASHINGTON -- President Donald Trump will direct his administration Thursday to expedite a new investigation into whether aluminum imports are jeopardizing U.S. national security. Commerce Secretary Wilbur Ross said the president will sign a memo ordering him to determine the impact of rising aluminum imports. Source
  • Suncor Energy reports net earnings of $1.35B on higher prices, production

    Economic CTV News
    CALGARY -- Suncor Energy is reporting net earnings of $1.35 billion or 81 cents per share in the first quarter of 2017, compared with $257 million or 17 cents a year earlier, thanks to higher commodity prices and oilsands production. Source
  • Softwood deal was close, but Canada gambled on better terms from Trump, former U.S. trade rep says

    Economic CBC News
    A former U.S. trade representative says the Obama administration was on the verge of signing a new softwood lumber deal with Canada but the pact fell through when someone on the Canadian side felt a better deal could be reached with the incoming Trump administration. Source
  • Shaw TV stations in Calgary, Edmonton and Vancouver closing

    Economic Toronto Sun
    Calgary community television station Shaw TV will close effective Aug. 15, Shaw Communications announced Wednesday, though the cable giant pledged to demonstrate its commitment to local coverage by injecting funds into Global News instead. Local Shaw TV stations will also be closing in Vancouver and Edmonton, affecting 70 positions between the three cities, the company said. Source
  • Small, medium sized softwood companies hit hardest by U.S. penalties

    Economic CTV News
    OTTAWA - Some softwood lumber companies could begin issuing layoff notices as early as next week as the fallout from the new import tariffs slapped onto Canadian softwood by the U.S. government start kicking in. Source
  • Corporate Canada warns Trump's tax cut plan would hurt competitiveness

    Economic CTV News
    OTTAWA -- Corporate Canada is bracing for the latest economic challenge out of Washington: a tax-cutting plan for U.S. businesses that many fear would pose a considerable threat to Canadian competitiveness as well as Ottawa's bottom line. Source
  • 'Whole Foods at a Joe Fresh price': Sears Canada eyes groceries amid transformation

    Economic CTV News
    TORONTO -- Sears Canada Inc. is looking to expand its plan to sell organic groceries and build so-called dash buttons to help customers purchase their favourite products from home as the retailer better known for tools and appliances looks to reinvent itself. Source