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Rail News: Federal Legislation & Regulation

CP, KCS urge STB to review proposed merger under waiver rule


In a filing made yesterday with the Surface Transportation Board (STB), Canadian Pacific Railway Ltd. and Kansas City Southern "asserted their right" to have the STB review their proposed merger under a waiver the board granted to KCS in 2001.

The filing was made in response to objections to the application of the KCS waiver that were filed with the STB by competitors and others, CP and KCS officials said in a press release.

The STB granted KCS — the smallest of the Class Is — an exemption from the new merger rules in 2001 because a combination involving KCS did not raise the same concerns that any transaction between the larger six Class Is might create.

CP and KCS officials explained in their filing that the logic under which the 2001 exemption was granted remains valid today. The combination would provide stronger competition against the larger Class Is that grew through mergers under the old rules, they claim. The filing states that the merger's only impact on competition will be that it forces the other Class Is to "face more of it."

CP and KCS officials welcome a thorough and fair STB approval process for the proposed merger, which would create the first U.S.–Mexico–Canada rail network. Revoking the waiver would unnecessarily complicate and prolong the board's review, they said.

CP and KCS officials also noted that "[n]o party has raised any basis for concern with the merits of the transaction itself; rather, they merely seek to make the already-robust regulatory review process more time-consuming and burdensome."

The two Class Is on March 21 announced they've entered a merger agreement in which CP would acquire KCS stock in a cash transaction worth $29 billion, including about $3.8 billion of outstanding KCS debt. Upon STB approval, CP would acquire control of KCS. The new railroad would be called Canadian Pacific Kansas City.

Contact Progressive Railroading editorial staff.

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