Canadian Pacific 'Disappointed' by Comments from Union Pacific CEO - Global Trade Magazine
  January 25th, 2016 | Written by

Canadian Pacific ‘Disappointed’ by Comments from Union Pacific CEO

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  • The Canadian Pacific Railway has offered $28.4 billion offer from to acquire Norfolk Southern Corp.
  • The Norfolk Southern board unanimously rejected the $28.4 billion CP offer as “grossly inadequate.”
  • Canadian Pacific: A CP-NS merger is clearly in the public interest since it would enhance competition.
  • Union Pacific is the product of numerous mergers that created one of the largest route networks.

Canadian Pacific said that it is “surprised and disappointed” by comments reportedly made by Union Pacific Corp.’s (UP) Chief Executive that UP is working behind the scenes with other railroads to support the status quo.

The Canadian Pacific Railway has offered $28.4 billion offer from to acquire the rail operations of Norfolk Southern Corp. The NS board unanimously rejected the offer terming it “grossly inadequate.”

Canadian Pacific claimed in a statement that a “CP-Norfolk Southern Corp. merger is clearly in the public interest since it would enhance competition in the industry and would also alleviate congestion in Chicago.”

The company went on to say that the Surface Transportation Board (STB) merger rules “are designed to enhance competition and, as with U.S. antitrust law generally, they are not designed to protect other railroads from balanced competition.”

Norfolk Southern officials have speculated that the STB would eventually reject a CP-NS combination.

“We note that UP is itself the product of numerous mergers that created one of the largest route networks in North America,” said the CP statement.

In a statement filed with the STB in 2011, Union Pacific CEO Lance Fritz argued that consolidation enabled the railroad to create “an efficient system removing bottlenecks and inefficient operations, including unnecessary interchanges, and increasing single-line service.” According to Fritz, the CP statement noted, UP has “been able to provide safer, better, and expanded service because of our ability to leverage the economics of consolidation.”

CP accused UP of trying to use political pressure “to co-opt the regulatory process” and prevent other railroads from enjoying the same benefits the UP has achieved through consolidation. Fritz’s attempts to rally support for the status quo among the other Class One railroads, the CP concluded, “demonstrate a disregard for competition, the processes of the STB, and the needs of shippers and the broader economy. CP is confident the STB will assess the proposed merger on its merits, without any pre-conceived ideas or external pressure.”