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7/27/2021
U.S. Rep. Peter DeFazio (D-Ore.), who chairs the House Committee on Transportation and Infrastructure, yesterday submitted to the Surface Transportation Board (STB) a letter in opposition to CN's request to use a voting trust in its merger proposal with Kansas City Southern.
DeFazio expressed concern that the proposed trust was not in the public interest, which would reduce competition and prejudice the outcome of the STB’s merger proceeding.
He cited the U.S. Department of Justice Antitrust Division, which explained in a May 14 submission to the board how voting trusts reduce competition both in general for railroad mergers and in particular to the consideration of a voting trust for CN and KCS.
"In general, putting two formerly competitive businesses under a single holding company immediately reduces the parties’ incentives to engage in competition. While the Surface Transportation Board regularly allowed railroad trusts throughout the many railroad consolidations of the 1980s and 1990s, the board has made the requirements to approve a voting trust more stringent since 2001 as part of an overall reform of merger rules," DeFazio wrote.
Now, according to federal procedures, applicants must show that trusts would be in the public interest, he noted.
"Approving a CN-KCS trust would signal to the rest of the rail industry that the STB is engaging in business as usual, despite the requirement to consider the public interest, and could launch a new round of mergers," the letter stated.
To read the full letter, click here.