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Rail News Home Rail Industry Trends

1/8/2009



Rail News: Rail Industry Trends

Kohl, Baldwin reintroduce antitrust enforcement act in Congress


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A “re-regulation” bill that failed to gather enough supporters on Capitol Hill last year is back in Congress. Yesterday, Sen. Herb Kohl (D-Wis.) and Rep. Tammy Baldwin (D-Wis.) reintroduced the Railroad Antitrust Enforcement Act, which proposes to repeal railroads’ antitrust exemptions.

The bill “responds directly to concerns that freight railroads are abusing their dominant market power and raising rates for those who rely on them to ship dozens of vital commodities, including coal and agricultural products,” Kohl and Baldwin said in a joint statement. The legislation would place the rail industry under the same antitrust laws that apply to other industries, including trucking, aviation, telecommunications and energy, they said.

"Freight railroads have the luxury of being protected from the competition other industries face. They can name their price and the consumer pays,” said Kohl. “This bill will bring scrutiny to freight railroads and encourage competition in this highly consolidated industry.”

Currently, railroad mergers and acquisitions are exempt from antitrust law and are reviewed solely by the Surface Transportation Board. Railroads that engage in collective ratemaking also are exempt from antitrust law.

Last year, the House and Senate judiciary committees approved the bill (H.R. 1650/S. 772), but the legislation didn’t advance to a full vote. Although similar measures also failed to gather enough support in 2006 and 2007, Kohl and Baldwin believe the bill has a better chance to advance this year because of the Democratic-controlled Congress.

Railroads and the Association of American Railroads (AAR) oppose the bill, contending that rates are based on market conditions and are not driven up as a result of market power abuses. Most shippers pay lower rates; on average, they’re paying half of what they paid in 1980 and receive better service than when railroads were heavily regulated, according to the AAR.

In addition, railroads compete with each other and other transportation modes, and are not a monopoly. Therefore, the legislation is a misguided effort to re-regulate the rail industry, the AAR believes.


Contact Progressive Railroading editorial staff.

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