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STB conditionally approves CN's acquisition of three Great Lakes Transportation railroads


On April 9, the Surface Transportation Board announced it approved Canadian National Railway Co.'s acquisition of Great Lakes Transportation L.L.C.'s three railroads.

Although the STB determined the deal is a minor transaction under existing merger rules, the board imposed several conditions, requiring CN to:
• adhere to a one-year oversight period to enable STB to monitor the transaction;
• keep all existing and active gateways open, waive rate regulation defenses on bottleneck line segments created by the transaction and comply with settlement terms reached with Burlington Northern Santa Fe regarding potential build-outs;
• address certain competitive concerns raised by some shippers regarding parallel lines operated by CN and Duluth, Missabe and Iron Range Railway Co. (DMIR);
• maintain a labor agreement requiring standard New York Dock labor protections, but not requiring employees whose jobs were transferred to Canada to move to the country to qualify for those protections; and
• continue to cooperate with the Federal Railroad Administration to implement a safety integration plan.

"[The] transaction connects two transportation systems that do not
compete, but complement each other, and will improve rail transportation in this part of the Great Lakes region," said STB Chairman Roger Nober in a prepared statement. "I expect CN … to integrate the companies smoothly so that shippers in the region receive quality service."

Under terms of a deal reached in October, CN will acquire the 212-mile DMIR, 355-mile Bessemer and Lake Erie Railroad Co., switching railroad The Pittsburgh & Conneaut Dock Co., and shipping firm Great Lakes Fleet Inc. for $380 million. The acquisition of Great Lakes Fleet still is subject to approvals by the U.S. Maritime Administration, Coast Guard, Federal Trade Commission and Department of Justice Antitrust Division.

CN and Great Lakes Transportation plan to complete the transaction by June.

Contact Progressive Railroading editorial staff.

More News from 4/12/2004