US Antitrust Chief Concerned About CP Rail-Norfolk Proposed Trust

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The head of the Justice Department’s antitrust division said he’s concerned about the proposed voting trust structure Canadian Pacific Railway wants to use to acquire Norfolk Southern Corp.

Bill Baer said at a Senate antitrust oversight hearing March 9 that the Justice Department will submit comments to the U.S. Surface Transportation Board, which has been asked to issue an order confirming the validity of the mechanism.

FedEx Corp. has told U.S. rail regulators that it is against Canadian Pacific Railway's proposed merger with Norfolk Southern Corp., adding to a long list of shippers opposing the deal.

In a letter to the Surface Transportation Board, the freight unit of FedEx said railroad consolidation would lead to worse service and higher transportation prices. Norfolk Southern has rejected three offers from Canadian Pacific, which continues to call for talks.

“FedEx Freight believes a merger would lead to diminished service as well as higher shipping costs,” the company said in the letter dated Feb. 25. Canadian Pacific CEO Hunter Harrison has said a tie-up would create a transcontinental railroad that would be more efficient and benefit shippers. Norfolk Southern said the deal can’t win regulatory approval and would hurt service.