Progress Rail files antitrust suit against Wabtec, seeks divestiture of GE Transportation

Progress Rail has filed an antitrust suit against Wabtec, arguing that the rival locomotive maker has engaged in anticompetitive behavior and should have to divest its acquisition of GE Transportation.

The 2019 GE acquisition, Progress Rail says in its lawsuit filed in the U.S. District Court in Delaware last week, tipped the competitive balance in favor of Wabtec. Wabtec was already the sole supplier of key locomotive components, Progress Rail says, while GE Transportation was the dominant locomotive manufacturer.

While the GE Transportation acquisition was under regulatory review, Progress Rail and Wabtec reached an agreement covering joint development, compatibility, and interchangeability matters. The companies later reached an agreement covering interoperable electronic train management systems, which would allow the Wabtec PTC system to be compatible and integrated with Progress Rail’s electronic train management system.

“Wabtec’s professed commitment to ‘open competition,’ ‘integration,’ and compatibility, however, was hollow and instead it has used its dominant market position to engage in anticompetitive exclusionary conduct that has harmed and continues to harm competition and consumers,” Progress says in its suit.

Progress has asked the court to order Wabtec to divest the former GE Transportation, to stop foreclosing Progress rail from access to information necessary to compete with Wabtec, and to force Wabtec to live up to its interchangeability agreement.

Progress claims that Wabtec has engaged in anticompetitive conduct in markets for long-haul freight diesel locomotives, Tier-4 compliant freight locomotives, and electronic train management systems.

Wabtec has used its dominant position to reduce required cross-product compatibility by restricting the flow of critical data and information, imposing unnecessary costs and delays on competitors, and making false statements to consumers about the viability of Progress Rail, Progress says in its suit.

“Unless stopped, Wabtec will continue to misuse its monopoly power to artificially exclude competition, stifle innovation, fortify existing and create new barriers to entry, and deprive consumers of free choice and price competition,” Progress says. “Such unchecked conduct will make the freight locomotives that drive this country’s economy more expensive, less safe, and worse for the environment.”

Progress cites a long list of Wabtec’s dominant positions in key locomotive markets.

Wabtec has manufactured about 75% of the active long-haul freight locomotives in North America and about 90% of new long-haul locomotives that comply with Tier-4 emissions regulations. It also is the dominant supplier of locomotive energy management systems, with Trip Optimizer holding a 79% share of the market, and its Locotrol distributed power system holding nearly 100% of the market. Wabtec’s Interoperable Electronic Train Management System, commonly called I-ETMS, is installed on virtually all freight locomotives.

In a statement released today, Wabtec said it would vigorously defend itself.

“We believe that Progress Rail’s recent complaint against Wabtec at its core is an unsupported attack on the merger of Wabtec and GE Transportation, which was completed over four years ago,” Wabtec said. “The merger has provided benefits to the entire industry, as well as Progress Rail itself. Progress Rail actively participated in the U.S. Government’s review of that transaction and benefitted by entering into agreements with Wabtec that transferred Wabtec technology to it as part of the United States Department of Justice and global merger clearance process. We also firmly believe that Progress Rail’s assertions that Wabtec breached agreements or engaged in other illegal conduct are wrong. We intend to aggressively defend the case in court.”