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Rail News: Federal Legislation & Regulation

U.S. Sens. Lee, Klobuchar ask AG's office to review proposed CP-NS deal


Two U.S. senators who serve on the Senate's Subcommittee on Antitrust, Competition Policy and Consumer Rights have written to the U.S. Attorney General's Office to express their concerns about Canadian Pacific's proposed takeover of Norfolk Southern Corp.

U.S. Sens. Mike Lee (R-Utah) and Amy Klobuchar (D-Minn.) sent the letter to Assistant Attorney General William Baer last week to say that CP's proposed voting-trust structure as part of its takeover bid could limit railroad regulators' ability to "protect competition and the public interest," according to a report in The Wall Street Journal.

Lee chairs the subcommittee and Klobuchar is its ranking member. The senators asked Baer, who serves in the U.S. Justice Department's antitrust division, to help evaluate the voting trust proposal. They wrote to Baer after CP filed its request with the U.S. Surface Transportation Board, which regulates railroad mergers, to issue a declaratory order that would confirm the voting trust structure, according to the article, which was posted on Klobuchar's website.

Under CP's proposed voting trust plan, CP Chief Executive Officer E. Hunter Harrison would sell his CP shares and take over executive operations at NS. CP would then be run by its President and Chief Operating Officer Keith Creel. The structure would be established prior to the STB's final approval of the merger.

NS has rejected all three of CP's merger proposals, the first of which was issued in November 2015.

In their letter, the senators wrote that the voting trust structure would allow Harrison to "implement a commercial strategy at Norfolk Southern different from that envisioned by current Norfolk Southern management," the Wall Street Journal reported.

They also said the STB's evaluation would benefit from Baer's expertise as to whether the voting trust would allow Harrison to coordinate with CP or begin integrating the companies before the merger receives final regulatory approval, the newspaper said.

"We have serious concerns that the voting trust Canadian Pacific plans to implement as part of its proposed acquisition of Norfolk Southern will limit the ability of the STB to protect competition," the senators wrote, according to the newspaper.

Contact Progressive Railroading editorial staff.

More News from 3/9/2016