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

  • Sears Canada shuts down Facebook comments amid flood of angry messages

    Economic CBC News
    After getting flooded with angry comments about its treatment of laid-off workers, and by calls for a boycott, Sears Canada is no longer allowing public posts on its Facebook site. It appears the retailer has also removed all comments made after July 6, though some earlier, negative posts still linger on the site. Source
  • Whole Foods sales struggle shows Amazon buying a fixer-upper

    Economic CTV News
    AUSTIN, Texas -- Amazon is set to have a fixer-upper on its hands, with Whole Foods reporting that a key sales figure declined again. The grocery chain said Wednesday that sales fell 1.9 per cent at established locations for the three months that ended July 2. Source
  • Facebook profit, revenue smash estimates as mobile ad sales soar

    Economic CBC News
    Facebook Inc. crushed quarterly profit and revenue estimates on Wednesday as the social media giant's push into video ads helped bolster its fast-growing mobile ad business. The company's shares were up 1.4 per cent at $168 US after the bell. Source
  • B.C.'s LNG outlook dims after $36B Pacific NorthWest LNG project scrapped

    Economic CTV News
    VANCOUVER - Experts say dreams of a booming liquefied natural gas industry in British Columbia appear to be evaporating, at least for the foreseeable future, after Petronas and its partners scrapped a $36-billion megaproject in the province. Source
  • Via Rail seeks to limit scope of wheelchair and mobility aid policy

    Economic CTV News
    TORONTO -- Via Rail is trying to limit the scope of a policy to make its trains more accessible to travellers using wheelchairs and mobility aids. The national rail provider had revised its policy in May in compliance with an order from the Canadian Transportation Agency, which directed Via to double the number of mobility devices that could be tied down on trains from one to two. Source
  • Fed leaves rates alone but moves closer to selling off bonds

    Economic CTV News
    WASHINGTON -- The Federal Reserve is keeping its key interest rate unchanged at a time when inflation remains persistently low. But it signalled Wednesday that it's edging closer to gradually shrinking its bond holdings, a step that would likely boost long-term borrowing rates including mortgages. Source
  • Coke Zero gets makeover as Coke Zero Sugar

    Economic CTV News
    NEW YORK -- Coke Zero is getting revamped as Coke Zero Sugar. The new name is intended to make clearer that the drink has no sugar, and a new recipe is intended to make the drink taste more like regular Coke. Source
  • CMHC maintains red warning for Canada's housing market as a whole

    Economic CBC News
    Canada Mortgage and Housing Corp. is keeping its overall risk rating for the national housing market at strong. The federal housing agency says overvaluation at the national level remains moderate and strong evidence is seen in Toronto, Vancouver, Hamilton and Victoria. Source
  • Housing agency maintains 'strong' risk for national real estate market

    Economic CTV News
    TORONTO - Canada Mortgage and Housing Corp. is keeping its overall risk rating for the national housing market at strong. The federal housing agency says overvaluation at the national level remains moderate and strong evidence is seen in Toronto, Vancouver, Hamilton and Victoria. Source
  • Toronto's housing market downturn to be short-lived: CMHC

    Economic CTV News
    TORONTO -- The recent downturn in Toronto's real estate market, brought on after Ontario introduced measures this spring including a foreign buyers' tax, is expected to be brief, the federal housing agency said Wednesday. Property prices in the city -- which fell from an average of $919,589 in April to $793,915 last month, according to data from the Toronto Real Estate Board -- should pick up again due to supply constraints and a stronger economy, Canada Mortgage and Housing Corp. Source