Canadian Pacific Seeks DOJ Review of 'Campaign' Against Norfolk Southern Deal

Canadian Pacific Railway Ltd. asked the U.S. Justice Department to look into a “collective campaign” by large railroads to block its hostile stock-and-cash bid for Norfolk Southern Corp.

The Canadian company said it sent a letter to inform the U.S. government of the “unprecedented action of major competitors organizing to block a new entrant from enhancing competition,” according to a statement Jan. 19.

Railroads including Union Pacific Corp. and BNSF Railway Co. have voiced opposition to the combination, saying it would lead to a cascade of industry consolidation and could worsen rail traffic jams in Chicago. Norfolk Southern’s board twice has rejected proposals from Canadian Pacific, including one that valued the target at about $27 billion in mid-December.

Union Pacific communicated with fellow railroads for the purpose of petitioning the government, spokesman Aaron Hunt said in an e-mail statement. “We oppose this merger, and we are prepared to discuss our views with the government.”

BNSF’s actions and comments have come after consulting with counsel and have been done according to the law, spokesman Mike Trevino said in a telephone interview. The Justice Department and CSX Corp. declined to comment.

U.S. lawmakers and rail customers have sent letters opposing the deal to the Surface Transportation Board, the regulator that approves combinations, even though a merger process hasn’t begun. The Teamsters Rail Conference, which represents more than 70,000 active railroad workers, said in a letter dated Jan. 18 that it opposes the merger because a combination could lead to job cuts.

Canadian Pacific, which operates in northern U.S. states including Illinois, Minnesota and North Dakota, said it is confident the regulator will make an impartial analysis of any proposal and “is disappointed that others appear not to share such confidence and have resorted to collective action to ensure no merger occurs.”