DOJ Picks Apart CSX-Pan Am Transaction

An excerpt: “Through its investigation and enforcement activities against mergers that may violate the Clayton Antitrust Act, the Department [of Justice] has extensive experience crafting remedies to competitive concerns in a multitude of industries and contexts. In the Department’s view, the proposed remedies do not accord with best practices, and are less likely to succeed than the kinds of robust relief that the Department has sought in prior cases, and will not fully address the competitive concerns posed by the CSX-Pan Am transaction. The Department recommends that the [STB] instead consider imposing a structural remedy, such as a carefully crafted divestiture. Unlike the complicated contractual arrangements proposed by the parties, structural remedies tend to be cleaner, more efficient, more durable, and easier to enforce, and they reduce the likelihood of ongoing entanglements that can further harm competition.”

“Reading the whole document provides clues as to the general atmosphere surrounding transactions such as the CSX Massena Line sale to CN and the entire KCS transaction, not to  mention future divestitures and changes of ownership,” notes Railway Age Contributing Editor Roy Blanchard. “The filing cites places where competition would be diminished rather than enhanced, and names conflicts of interest involving CSX, Genesee & Wyoming and Norfolk Southern. DOJ suggests that CSX divest itself of any interest in Pan Am Southern (PAS, the joint venture of Pan Am and NS). Similarly, DOJ says that somebody other than Genesee & Wyoming operate the White River Jct. to New Haven PAS segment, given Genesee & Wyoming’s ownership of the New England Central and Connecticut Southern.” 

The complete DOJ filing, which Blanchard has highlighted “to provide a sense of where DOJ is coming from and what it proposes as solutions,” can be downloaded below. “Some reading between the lines may be in order,” he says.

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