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Rail Antitrust Immunity Targeted By Lawmakers

by Glenn Hess
May 18, 2009 | A version of this story appeared in Volume 87, Issue 21

The railroad industry is asking Congress to reject legislation that would end long-standing antitrust exemptions for freight rail companies, saying the bill (H.R. 233) would subject railroads to multiple regulatory frameworks that could lead to confusing or even conflicting rules. "This bill is not just about antitrust law, it is an attempt to overturn long-established regulatory policies that have provided enormous benefits to shippers and American consumers," Union Pacific Railroad Senior Vice President J. Michael Hemmer told a panel of the House Judiciary Committee last week. The legislation would give both the Justice Department and the Federal Trade Commission a role in reviewing proposed rail mergers, instead of leaving them as now under the sole jurisdiction of the Surface Transportation Board. Shippers of chemicals, coal, and agricultural commodities argue that the antitrust exemptions have allowed the railroad industry to consolidate into four regional monopolies that charge exorbitant rates and provide poor service. A study released at the hearing by the Consumer Federation of America, an advocacy group that supports the legislation, concludes that "rampant consolidation" and a lack of regulatory oversight have "allowed railroads to abuse their monopoly pricing power and overcharge consumers and shippers $3 billion per year." The Senate is expected to vote on a companion measure (S. 146) next month.


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