OREANDA-NEWS. Canadian Pacific said today that it is surprised and disappointed by comments reportedly made by Union Pacific Corp.'s (UP) Chief Executive that UP is working behind the scenes with other railroads to support the status quo.

A CP-Norfolk Southern Corp. (NS) merger is clearly in the public interest since it would enhance competition in the industry and would also alleviate congestion in Chicago. The Surface Transportation Board (STB) merger rules are designed to enhance competition and, as with U.S. antitrust law generally, they are not designed to protect other railroads from balanced competition.  

CP note that UP is itself the product of numerous mergers that created one of the largest route networks in North America. In a statement filed to the STB on April 11, 2011, UP CEO Lance Fritz argued that consolidation enabled the railroad to create "an efficient system removing bottlenecks and inefficient operations, including unnecessary interchanges, and increasing single-line service." According to Mr. Fritz, UP has "been able to provide safer, better, and expanded service because of our ability to leverage the economics of consolidation."  

Mr. Fritz reiterated his statements to the STB on March 1, 2013.

It is unfortunate that UP would try to use political pressure to co-opt the regulatory process and prevent other railroads from enjoying these same benefits and becoming more effective competitors to UP. Mr. Fritz's attempts to rally support for the status quo among the other Class 1s demonstrate a disregard for competition, the processes of the STB, and the needs of shippers and the broader economy.

CP is confident the STB will assess the proposed merger on its merits, without any pre-conceived ideas or external pressure.