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4/9/2001



Rail News: Rail Industry Trends

CN, WC file STB, Competition Bureau applications seeking merger approvals


Following last week’s proposed-merger blessing by Wisconsin Central Transportation Corp.’s stockholders, Canadian National Railway Co. and WC April 9 filed a common control application with Surface Transportation Board seeking regulatory approval.
The railroads simultaneously filed a pre-merger notification and competitive impact brief with Canada’s Competition Bureau requesting an advance favorable ruling certificate.
The $1.2 billion transaction would provide CN ownership and control of a NAFTA network link between Superior, Wis., and Chicago. CN has agreed to maintain existing rail gateways affected by the merger and ensure that service on the combined CN/WC network is as good, or better than, current service.
Under the merger agreement, WC’s network would be operated as CN’s sixth division, retaining its local community ties. The Class I wouldn’t abandon WC lines and would maintain WC’s major operations centers at their present locations.
CN and WC officials claim WC workforce reductions resulting from the merger would be relatively minor, with employee impacts mitigated by normal attrition and CN’s efforts to retrain and/or relocate workers.
In the STB filing, CN and WC officials emphasized their earlier assertions that the transaction should be considered a minor one, and claim the end-to-end combination already is supported by more than 280 shippers, local governments, public agencies and other railroads.
However, Alliance for Rail Competition Executive Director Diane Duff last month said the entire U.S. rail industry has made it clear that it’s entered an end-game merger period, and a seemingly minor transaction could have major implications.
The CN/WC combination could weaken Canadian Pacific Railway’s position as a potential merger partner, raise concerns about service disruptions and lessen the opportunity for building a new Class I competitor, such as Dakota Minnesota & Eastern Railroad’s recent attempt, she said.
CN and WC officials expect STB to rule within 30 days of the filing whether the merger would be treated as a minor one. CN retains an option to terminate the WC merger agreement without penalty if STB decides not to treat the transaction as minor.
Final STB and Competition Bureau merger rulings are expected in fall.


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