Competition And Mergers In The Railway Sector

Competition And Mergers In The Railway Sector

America’s railways are vital to the nation’s security and prosperity, and even though commuter transport isn’t as popular as it once was, railway travel is still an effective means to get around the country. Where modern railways shine, however, is in freight transport. This is because so much of America’s goods travel by rail, and the railway sector still provides good jobs to hard-working Americans.

In fact, a whole team of railway professionals needs to be involved in maintaining rail equipment. From railway bulbs and locomotive headlights from online suppliers found at sites like to the food provided by vendors in dining cars, every detail must be accounted for to keep rail traffic moving efficiently. Additionally, rail line maintenance and security must be managed by trained experts due to the importance of rail lines in logistics management.

A Joint Venture Up For Review

Because there are so many people, vendors and technicians involved in the modern rail industry, it’s important to remember that rail lines are still businesses. As such, competition needs to be monitored by government officials just like in any other major industry. Additionally, rail lines serve as a kind of private-public partnership since railroads are interstate in nature but are sometimes managed and maintained by private companies. The issue of competition in the rail industry becomes an even bigger concern given that railways use existing infrastructure that is shared between various rail companies for freight and commuter traffic.

Due to the scrutiny that needs to be placed on business dealings involving rail service providers, the U.S. Department of Justice (DOJ) Antitrust Division recently weighed in on a merger involving two rail lines: Canadian Pacific and Kansas City Southern. The two had previously agreed to merge in September 2021, prompting the Surface Transportation Board (STB) to look into the joint venture’s application. Regarding the application, the DOJ stated that it wanted the STB to ensure the deal was thoroughly scrutinized to avoid antitrust issues.

The combined railway would traverse the United States and create a rail line from Canada to Mexico. The joint railway is tentatively called Canadian Pacific Kansas City (CPKC) and is expected to cover over 20,000 miles of track should the merger receive approval from the STB. Involvement by the DOJ has resulted in a statement issued on January 24, 2023, affirming that the venture must be scrutinized to promote competition in the railway sector.

Ensuring Fair Competition In The Rail Industry

The Antitrust Division of the DOJ was initially prompted to make clear that its position does not imply that the merger would harm competition. In response, the DOJ stated that it has not suggested that the merger would harm competition; however, the Antitrust Division is committed to ensuring fair competition, and some public criticism of the merger had been raised during a public hearing which was held September 28, 2022. In response, the STB has stated that it will review CPKC’s application thoroughly to ensure the potential merger adheres to antitrust laws.

Competition As A Matter Of Public Interest

What’s important to note in this matter is the role competition and antitrust laws play in consumer affairs. When competition is stifled, accountability becomes more challenging to achieve. A company or partnership with an oligopoly or monopoly can also manipulate prices and services, potentially leading to economic harm in targeted areas and across the country.

As regional economic destabilization occurs, the ripple effect this can have on adjacent industries becomes problematic. Because the United States is an economic powerhouse on a global scale, problems at home can have worldwide implications for the economies of other countries. In turn, even small-scale antitrust cases have the potential to cause a lot of harm and diminish the economic potential of people and governments thousands of miles away.

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