Manny:
There is a different process for rail mergers. DOJ and the FTC may express opinions but, the US Surface Transportation Board will be the agency that actually reviews the proposed merger and attaches any conditions they believe necessary to address competitive concerns. The merging parties may then accept the conditions and proceed with the merger, file an appeal with an appellate court to contest the conditions or, simply scrub the merger and walk away.
What has happened to this point is the STB has issued a ruling that a waiver from new merger rules given KCS back in 2001 still applies. This means that if CP and KCS submit a merger application to the Board, it will be reviewed under the old merger rules in effect up until 2000. Basically those old rules placed greater importance on what was best financially for the railroads involved in the merger than the potential for negative impact on competition in the industry.
The newer major merger rules the Board issued in 2001, require carriers proposing a major merger (in the STB’s apparent definition - any merger between Class 1 railroads that doesn’t involve KCS) to outline in their application the mergers potential impact on rail competition and provide their proposed remedies. Additionally, the participants in a major merger must outline the steps they will take to prevent any industry wide service disruptions resulting from the merger.
In short, the focus of the new rules is preserving or enhancing competition and preventing the service disruptions that were common with past mergers.
Since CP and KCS first announced their intention to merge, CN has submitted a merger proposal to the KCS board which they must now review. Should the KCS board decide to move forward and negotiate a merger agreement with CN; CN has said they believe the STB should review their proposal to merge with KCS using the newer major merger rules. (And I have confirmed this with my old CN account manager this afternoon.)
This is going to get interesting and popcorn and a cold beverage are recommended! 😉
Curt
