WASHINGTON — Canadian Pacific Kansas City insists that it did not miss any deadlines when it asked federal regulators to give Canadian National’s proposed acquisition of Iowa Northern Railway a more thorough review.
CN this week claimed that CPKC missed two deadlines when it asked the Surface Transportation Board to consider the $230 million deal a significant transaction, rather than a minor acquisition.
“CPKC did not miss any deadline, as there is no regulatory deadline restricting submission of evidence regarding the appropriate classification of a transaction to the first 20 days following the filing of a putatively ‘minor’ application,” CPKC said in a regulatory filing yesterday. “The Acceptance Decision explained … that its classification of the Transaction as Minor was based solely on information appearing on ‘the face of the Application,’ and it ‘emphasize[d] that this [classification] is not a final determination and may be rebutted by subsequent filings and evidence submitted into the record for this proceeding.’ … CPKC’s Comment was such a ‘subsequent filing,’ and the Board cannot be precluded from reconsidering its preliminary classification in light of the evidence that CPKC submitted last week.”
The Surface Transportation Board on Feb. 29 designated the acquisition as a minor transaction. CPKC on March 1 asked the board to consider it a significant transaction that would require a longer and more rigorous regulatory review.
CPKC says CN’s acquisition of Iowa Northern raises competitive concerns that should make the deal a significant transaction.
“Through their offer of gateway protections, Applicants acknowledge competitive issues and attempt to get out in front of them. But that one commitment does not address at all the reduction in horizontal competition, and it cannot suffice to preclude the need for a thorough analysis of all of the competitive issues in the case, which a ‘Minor’ classification is not designed to accomplish. As the Board’s regulations state unequivocally, a Minor classification is only possible when ‘the transaction clearly will not have any anticompetitive effects,’” CPKC said.
CPKC and regional Iowa Interstate say CN’s acquisition of the Iowa Northern would stifle competition in the Hawkeye State.
“In sum, Applicants are trying to run from the fact that the Transaction raises real competitive concerns. Under the Board’s procedures those concerns can and should be brought to light at an early stage, which is what CPKC has properly done. Applicants would like to force the Board to make a binding determination that the Transaction is Minor based on the face of the Application and whatever was filed within 20 days thereof, and nothing else,” CPKC said. “But that is not the law, and it would be terrible policy. In fact, the Board made only a preliminary determination and it now has evidence showing that that determination should be revised. It should do so promptly, so that the real competitive issues in this case can be examined in accord with the procedures that the Board’s regulations demand.”
The U.S. Department of Agriculture yesterday said it would submit comments on the acquisition, and the National Grain and Feed Association has said that the STB should review the CN-IANR deal as a significant transaction in light of consolidation in the industry.
The STB must approve minor transactions unless it finds a merger would harm competition. CN says acquisition of the 218-mile Iowa Northern will boost rail competition, divert freight off the highway, and give Iowa shippers broader access to single-line service.
