Canadian Pacific wants investigation of merger opposition

AP News
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Posted: Jan 19, 2016 5:25 PM

OMAHA, Neb. (AP) — Canadian Pacific railroad wants the Justice Department to investigate whether other major freight railroads are improperly coordinating opposition to its proposed acquisition of rival Norfolk Southern.

Canadian Pacific said Tuesday that it sent a letter to regulators asking them to investigate after executives from other major railroads said they had discussed the proposed deal.

Canadian Pacific said it believes that conversations between executives from Union Pacific, BNSF and CSX railroads may have violated antitrust rules, especially since Norfolk Southern has rejected all of its offers.

Union Pacific spokesman Aaron Hunt said the company's executives talked with other railroads to prepare to petition the government in opposition of any deal. BNSF spokesman Mike Trevino says railroad officials consulted lawyers before taking action to prepare for likely regulatory action related to a possible merger. CSX officials declined to comment.

Canadian Pacific has said combining its railroad with Norfolk Southern would create a more efficient operation that could haul more freight without adding new tracks. CP also predicts that it could cut roughly $1.8 billion in annual costs.

Norfolk Southern calls Canadian Pacific's roughly $30 billion offer inadequate, believes the railroad will fare better if it remains independent and doesn't think regulators would approve a major railroad merger.

Federal regulators haven't approved any major railroad mergers in more than 15 years since adopting tough restrictions on them in 2001. One of the only major deals in recent years is when Warren Buffett's Berkshire Hathaway conglomerate bought BNSF railroad in 2010.

Canadian Pacific officials say they think the proposal could gain approval.