Canadian Pacific Railway (CP) today asked the Department of Justice to probe what the railroad called a "concerted effort" by CEOs of several U.S. Class I railroads to block CP's proposed $27 billion acquisition of Norfolk Southern Corp. (NS).
In a letter to Justice Department officials, Calgary-based CP said the executives have begun a "widespread campaign of meeting and solicitations" with customers, the media, and other interested parties in an effort to block the proposed deal, which must be approved by U.S. and Canadian regulators. The letter does not identify any of the railroads or their executives.
CP cited a news story late last week quoting Matt Rose, chairman of Fort Worth, Texas-based BNSF Railway Co. saying that a CP-NS merger would put CSX Corp., NS' rival in the east, at a severe competitive disadvantage and would trigger further rail consolidation. Rose said in the report that BNSF's customers are not in favor of further rail mergers. However, BNSF would bid for another railroad if a CP-NS combination appeared likely to be approved, Rose was quoted as saying.
CP also cited a story last week quoting Lance Fritz, chairman, president, and CEO of Union Pacific, that the Omaha-based railroad would do everything in its power to block rail mergers.
In an e-mail, CP spokesman Martin Cej said the "unprecedented action of an entire industry participating in meetings to prevent competition was something that merited attention of the antitrust authorities." Cej added that "certain railroads do not have confidence that the regulatory process for clearing mergers will result in a conclusion that is consistent with their goal of maintaining the status quo. As a result, they've said publicly that they have held meetings and devised plans to take whatever steps are necessary to prevent any merger from occurring."
The Association of American Railroads declined comment on the matter.
