Two House Democrats Urge Rejection of Canadian Pacific Bid for Norfolk Southern


Two senior Democrats in the U.S. House of Representatives urged federal regulators on Jan. 6 to reject any acquisition bid for railroad operator Norfolk Southern Corp. by Canadian Pacific Railway Ltd.

In a Jan. 6 letter to the Surface Transportation Board, senior Democrats on the House Transportation Committee warned that an acquisition would reduce competition and exacerbate shipper concerns about costs.

"The board is in the process of responding to the letter," said Dennis Watson, spokesman for STB, which has approval authority for acquisitions in the railroad industry.

The Canadian company in mid-November disclosed its $28 billion offer to buy Norfolk Southern. It would be the first merger involving a U.S. railroad since STB rewrote the rules in 2001 after a wave of consolidation reduced the number of major North American railroads to seven from 35.

"There are already strong indications that this merger will serve as a catalyst for even more consolidation in the railroad industry ... leaving shippers with fewer choices, less competition and prolonged service disruptions," Reps. Peter DeFazio of Oregon and Michael Capuano of Massachusetts wrote.

"The only benefit to this ill-conceived transaction is to CP — to pad the pockets of Wall Street investors and corporate executives at the expense of captive shippers and the public interest," they said.

DeFazio is the ranking Democrat on the transportation committee, and Capuano is the top party member on the panel's Subcommittee on Railroads, Pipelines and Hazardous Materials.

Industry groups representing major freight customers of Norfolk Southern also have asked STB to reject any bid by Canadian Pacific.

Norfolk Southern has rebuffed several bids from Canadian Pacific since November.