The Surface Transportation Board can’t yet determine whether proposed remedies sought by BNSF and CN over potential operational impacts stemming from the Canadian Pacific–Kansas City Southern merger would be “minor” or “significant” transactions.
The board defines minor transactions as those that “clearly” have no anticompetitive effects or those in which any such impacts are outweighed by the transaction’s anticipated contribution to the public interest in meeting significant transportation needs. Otherwise, such transactions are considered significant.
A significant transaction would require applicants to submit additional information and data on how a proposed action would affect competition. For instance, in attempting to acquire New England short line Pan Am Railways (NASDAQ: CSX), CSX initially wanted the board to consider the acquisition a minor transaction. But STB said the proposed acquisition would be a significant transaction, which would allow the board more time to mull over potential impacts.
BNSF (NYSE: BRK.B) last month filed testimony that described issues that could arise from Canadian Pacific’s proposed acquisition of Kansas City Southern. In that filing, BNSF also asked that STB classify its requests for trackage rights for certain areas as a minor transaction, according to STB’s decision released last Friday.
BNSF is seeking overhead trackage rights on a line owned by KCS between Robstown, Texas, and Laredo, Texas; on a KCS line between Metro, Texas, and Bossier City, Louisiana; and on a line owned by CP (NYSE: CP) affiliate Soo Line Railroad between Savanna, Illinois, and Clinton, Iowa, as a “means ‘to ensure the preservation of effective competition in areas affecting BNSF shippers, the shippers’ customers, and BNSF,’” said STB, quoting BNSF’s filing.
BNSF also requested that STB waive certain filing requirements that would be applicable in significant transactions.
But STB said on Friday that it can’t commit to categorizing BNSF’s requests as minor transactions because BNSF gave little information about the operations or the relevant markets of the rail lines in question, nor did it describe in detail any trade-offs or potential effects on competition should BNSF obtain those trackage rights.
“Should BNSF decide to seek trackage rights through responsive applications, after reviewing those applications, the Board will determine whether the relief sought is minor or significant based on the information provided by BNSF at that time and may require the filing of additional information depending on that determination,” STB said.
Speaking on CN’s request for KCS and CP to divest KCS’ Springfield line in Missouri and Illinois, STB said: “further information is necessary for the Board to assess the competitive impacts of the divestiture condition in the anticipated responsive application CN (NYSE: CNI) describes. …
“While the Board will determine whether the proposed transaction is minor or significant based on the information contained in CN’s responsive application, the Board commends CN for recognizing the value of the information required in a significant transaction, such as market analyses and operational data, as the Board assesses its claims of competitive harm.”
In addition to issuing a decision on BNSF’s and CN’s filings from last month, STB’s Office of Environmental Analysis said Friday that it has issued a final scope of study for the environmental impact statement that will be created as part of CP’s proposed acquisition of KCS.
The office said it will now prepare and issue a draft environmental impact statement regarding potential effects from the merger, as well as issue preliminary mitigation measures.
STB set up a website on the environmental review of the merger, which can be viewed here.
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