In a letter to the Attorney General and the Chairman of the Surface Transportation Board, Klobuchar said one of the most concerning aspects of the potential merger is that railroads’ current antitrust exemption prevents DOJ from blocking mergers even if DOJ finds a merger would harm competition 

As chair of the Senate Judiciary Antitrust Subcommittee, Klobuchar has introduced legislation to repeal the outdated and anticompetitive antitrust exemption for railroads and make railroad mergers subject to full antitrust scrutiny by DOJ 

WASHINGTON, D.C. – U.S. Senator Amy Klobuchar today raised concerns over the potential CSX Corp./Canadian Pacific Railway Ltd. merger. In a letter to Attorney General Eric Holder and Surface Transportation Board (STB) Chairman Daniel Elliott, Klobuchar said one of the most concerning aspects of the potential merger is that railroads’ current antitrust exemption prevents the Department of Justice (DOJ) from blocking mergers even if DOJ finds that a merger would harm competition. Jurisdiction over railroad mergers resides solely with the STB. As chair of the Senate Judiciary Antitrust Subcommittee, Klobuchar has introduced legislation to repeal the outdated and anticompetitive antitrust exemption for railroads and make railroad mergers subject to full antitrust scrutiny by DOJ.

“Given recent concerns about shipping delays and ongoing concerns about anticompetitive conduct in the railroad industry, any further consolidation would prompt significant concern,” Klobuchar wrote. “Should CSX and Canadian Pacific agree to merge, I expect your agencies to fully review the competition implications of such a combination.  Until the Department of Justice is given the full authority to independently review the legality of railroad mergers under the Clayton Act, I ask that the Surface Transportation Board give full weight to the antitrust analysis of the Antitrust Division.”

Klobuchar and Senator David Vitter (R-LA) have introduced bipartisan legislation to address so-called “captive shipping” and help promote fairness and competition in the railroad industry. The Railroad Antitrust Enforcement Act removes the railroad industry’s obsolete exemption from the antitrust laws. Doing so would require that the railroad industry play by the same antitrust rules as other industries, resulting in more competitive pricing that helps keep costs down for shippers and customers.

The full text of the senator’s letter is below:

Dear Attorney General Holder and Chairman Elliott:

I am writing to you about concentration in the railroad industry and specifically the recent reports of a potential merger between CSX Corp. and Canadian Pacific Railway Ltd.  Given recent concerns about shipping delays and ongoing concerns about anticompetitive conduct in the railroad industry, any further consolidation would prompt significant concern.

The industry has recently been plagued with complaints about rail shipping delays.  As I travel across Minnesota I continue to hear from agricultural producers and energy consumers who are experiencing significant delays in service.  This has led to lost sales, involuntary shutdowns at processing facilities, and disruption to agriculture markets.

I have also long heard concerns from the shipping industry about the railroad industry’s antitrust exemption and the anticompetitive conduct that occurs as a result.  Without access to competition, rail customers are often in a “take it or leave it” position with respect to both price and service.  I have long been concerned about costs for shippers and the recent delays are another example of why we need more railroad competition.  That is why I introduced the Railroad Antitrust Enforcement Act, S. 638, to repeal the outdated and anticompetitive antitrust exemption. 

Given the potential merger between CSX and Canadian Pacific, one of the most concerning aspects of the railroad industry’s antitrust exemption is that the Department of Justice (DOJ) has no independent authority to review and, if appropriate, block or condition a railroad merger.  Under current law, the DOJ can only play an advisory role to the Surface Transportation Board, which holds the sole authority to approve Class I railroad mergers if it finds  them to be “consistent with the public interest,” 49 U.S.C. § 11324.  It is important to recognize the significance of the Surface Transportation Board’s review.  However, the DOJ has a different mandate under Section 7 of the Clayton Act, 15 U.S.C. § 18, which prohibits transactions that threaten “substantially to lessen competition in any line of commerce in any section of the country.”  The DOJ’s Antitrust Division is uniquely qualified to conduct this analysis.  Virtually every other sector of our nation's economy is subject to merger review at either the DOJ or Federal Trade Commission (FTC).  The railroad industry is unique even among other regulated industries such as airlines and telecommunications where there is a full antitrust review at the DOJ or FTC along with concurrent reviews at the Department of Transportation and Federal Communications Commission, respectively.

Should CSX and Canadian Pacific agree to merge, I expect your agencies to fully review the competition implications of such a combination.  Until the Department of Justice is given the full authority to independently review the legality of railroad mergers under the Clayton Act, I ask that the Surface Transportation Board give full weight to the antitrust analysis of the Antitrust Division. 

We can all agree that competition is an effective way to ensure low prices, high quality service, and innovation.  I am pleased that the Surface Transportation Board has launched an inquiry into competition in the railroad industry.  However, more can be done to promote competition, including making railroad mergers subject to full antitrust scrutiny by the Department of Justice and subjecting the entire industry to the antitrust laws.  I look forward to working with you on these important issues.

Sincerely,

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