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Union Pacific takes Surface Transportation Board to court over CP-KCS merger

Union Pacific is asking a federal court of appeals to review the decision by the Surface Transportation Board to approve the merger between Canadian Pacific and Kansas City Southern.

UP had expressed concerns during STB hearings on the merger that the board needed to impose conditions upon CP and KCS that would ensure competition at interchanges.

“The merger of Kansas City Southern and Canadian Pacific is likely to reduce competition and negatively impact shippers and stakeholders,” UP (NYSE: UNP) told FreightWaves in a statement on why it petitioned the U.S. Court of Appeals for the District of Columbia Circuit on Wednesday. “In approving the merger, the Surface Transportation Board acknowledged these concerns, but did not adopt solutions to remedy the harms.”

STB had approved the merger between Class I railroads CP and KCS on March 15 and then last month, CP and KCS finalized the merger, becoming Canadian Pacific Kansas City, or CPKC. CPKC has said the merger would result in the first transcontinental railroad between Canada, the U.S. and Mexico that would provide single-line service between the three countries.

In the two-page petition to the court, UP said: “Union Pacific seeks relief on the grounds that the agency action is in excess of the Board’s authority; that it is arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law; and that it is not supported by substantial evidence. Union Pacific requests that this Court vacate the order under review and grant such additional relief as may be necessary and appropriate.”

In response to UP’s action, CPKC (NYSE: CP) told FreightWaves in a statement: “We don’t know what UP’s argument is, but in our view, the STB conducted a comprehensive, thorough and thoughtful review of the combination which produced the right final decision clearly recognizing the combination’s many benefits.”

STB told FreightWaves it does not comment on pending litigation.

If the court sides with UP, then STB could have to reconsider what conditions to place upon CPKC that would ensure competition.

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Click here for more FreightWaves articles by Joanna Marsh.

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