WASHINGTON — Responding to comments made to the Surface Transportation Board on their voting trust proposal, Canadian National and Kansas City Southern have made their final case for approval of a voting trust while the CN-KCS merger is being considered by regulators, rebutting at length claims made by rival Canadian Pacific.
The Tuesday filing, available here, closed the comment process prior to the STB’s ruling on the voting trust and provided a response to other filings during the comment period, which closed June 28. It offers the railroads’ rebuttal to concerns over the proposed trust and competitive impact of the merger, while dismissing a number of other issues raised in filings as “not relevant” to the voting trust review.
“We are confident that our voting trust meets all the standards set forth by the STB and believe that, after a fair and thorough review by the STB, it should be approved,” JJ Ruest, CN’s CEO, said in a press release.
The filing asserts that approval of the voting trust will allow KCS to maintain full independence while the merger is considered, that KCS would suffer no harm if the merger were not approved and CN was forced to sell the railroad. It dismisses filings by Canadian Pacific — which still hopes to acquire KCS under an offer made before the CN bid — as failing to show “any public interest factors that militate against the use of a voting trust.”
It also responds to CP’s assertions that the merger itself would be anti-competitive by repeating the CN contention that the planned divestiture of a KCS line bewteen Baton Rouge and New Orleans, where CN has a parallel route, addresses the only point where the merger would not qualify as an end-to-end merger, and includes a map showing routes it says maintains competition even with the current KCS and CN north-south routes in the same hands.
Among comments the latest filing characterizes as not relevant to the voting trust is one from Amtrak in opposition to the trust [see “Shipper groups, Amtrak, rail labor oppose CN-KCS merger plans,” Trains News Wire, June 29, 2021]. The CN-KCS filing says Amtrak’s concerns over its ability to add additional service are a matter for consideration of the merger, rather than the voting trust. It similarly dismisses concerns of rail unions, saying that the voting trust itself will not affect jobs, and repeats the railroads’ earlier assertion that the merger will lead to growth that will in turn generate more jobs.
The filing notes concerns raised by Barrington, Ill., and other communities in the Chicago area over potential impact of increased traffic [see “Chicago suburb claims CN-KCS combination would create traffic nightmare,” News Wire, May 11, 2021]. It says the two railroads will work with those communities “to identify impacts and discuss concerns,” but that approval of the trust will have “no immediate impact on rail traffic patterns in Chicago and elsewhere.” In a footnote, the filing notes that many of letters have the same wording and were filed by the same lobbiyist, and that “it is not clear who funded this lobbyist’s efforts.”
Canadian National, owns the former Illinois Central, that runs North/ South, to the Gulf. To remain competitive, it would seem to me that Canadian Pacific would be a better choice to merge with KCS for its own North/ South line, to the Gulf.