U.S., CANADIAN RAILROADS SPEAK OUT AGAINST MERGER RULES

U.S., CANADIAN RAILROADS SPEAK OUT AGAINST MERGER RULES

   U.S. and Canadian railroads Thursday urged the U.S. Surface Transportation Board to refrain from imposing its railroad merger rules, which the industry said are overly stringent and would end the possibility of future rail mergers.

   The STB heard oral arguments from railroads, shippers, ports and other parties with an interest in the board's plan to impose rules to guide future North American rail mergers. The industry is currently operating under an STB-imposed 15-month merger moratorium, scheduled to expire this summer when new rules are to take effect.

   In comments to the board, railroads argued that consolidations can bring public benefits, and it's wrong for the STB to assume that future mergers will harm the shipping public.

   The North American carriers said they are particularly opposed to proposals that would require applicants to show that a merger would not only preserve but enhance competition.

   Competition enhancement provisions go beyond the STB's legal authority, said attorney Samuel Sipe, who represented the Association of American Railroads.

   The law does not call on the STB to promote competition, Sipe said, but to preserve competition.

   Applicants should not have to give up the private benefits of mergers, he said. “I don't think there should be a surcharge on a merger,” Sipe said.

   Paul Cunningham, an attorney representing Canadian National Railway, said the proposed rules would violate the North American Free Trade Agreement and would stand in the way of transcontinental mergers.