CN Files Letter With Surface Transportation Board - Seite 2

First, the CN Proposal is a manifestly superior offer to KCS because the combined CN-KCS network can provide more public benefits by connecting the continent, promoting growth, and competing more aggressively with the trucking industry for long-haul movements. Rail customers will benefit from more seamless single-line service, but so will local communities, employees, and the environment from converting truck traffic from busy interstates and highways to rail. A combined CN-KCS route would also be shorter, faster and more direct than rail or truck competitors, resulting in improved efficiency, enhanced competition and greater options for customers. The fundamentally pro-competitive nature of the proposed CN-KCS combination, which will give customers better service options, is further enhanced by CN’s commitment to address any competitive concerns under the current merger rules without seeking a waiver, as CP has done.

In the 72 hours since news of the CN Proposal was made public, CN has engaged in numerous discussions with its customers and other stakeholders about the proposal and how a combined CN-KCS will deliver exceptional value and new, highly competitive single-line services. Already, customers are expressing enthusiasm about the CN Proposal, and many have expressed a desire to write letters of support that we will be sharing with the Board in the coming days.

Second, a combined CN-KCS would remain only the fifth largest railroad in the United States – both on a track-mile basis and on an operating revenue basis. And as the Board is well aware, the fiercest and most aggressive “competitor” to the freight rail industry is the trucking industry, which has a dominant market share for the transportation of most commodities – including intermodal traffic. The principal public benefit from a CN-KCS transaction will be the creation of a seamless, integrated North American railway that can compete head-to-head for long-haul intermodal movements that move via truck.

CP’s general claim that a CN-KCS would be “anticompetitive” appears premised on both a gross overstatement of the actual competitive overlap and the assumption that not a single thing would be done to maintain rail competition for the small number of customers served by both CN and KCS. But as CP knows well, the major merger rules and Board precedent require remedies to address any reduction of competition for the handful of customer facilities that are served by both CN and KCS.