Canadian Pacific Says Disappointed By Comments Made By Union Pacific Chief

(RTTNews) - Canadian Pacific (CP, CP.TO) said that it was surprised and disappointed by comments reportedly made by Union Pacific Corp.'s (UNP) Chief Executive that Union Pacific was working behind the scenes with other railroads to support the status quo.

Canadian Pacific noted that CP-Norfolk Southern Corp. (NSC) 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 or 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 said it is confident the STB will assess the proposed merger on its merits, without any pre-conceived ideas or external pressure.

CP note that Union Pacific 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, Union Pacific 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, Union Pacific 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 Union Pacific 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 Union Pacific. 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, Canadian Pacific said.