WASHINGTON — The Justice Department’s Antitrust Division is investigating Norfolk Southern and Virginia terminal railroad Norfolk & Portsmouth Belt Line for alleged anticompetitive conduct against CSX at a major Norfolk container terminal.
CSX, which says NPBL operates like an alter ego of NS, disclosed the investigation in a filing with the Surface Transportation Board last week.
CSX and NS have been locked in a legal dispute over the NPBL for six years. NS has controlled the 36-mile NPBL since 1982 by virtue of its 57% ownership stake; CSX owns the other 43% of the railroad that was created as a neutral switching carrier in 1896.
CSX contends that it should have direct access to the Virginia Port Authority’s Norfolk International Terminal via NPBL, which reaches the dockside terminal over NS trackage. CSX also alleges, among other things, that NS and NPBL set a switching rate that effectively prevents CSX from competing at NIT.
The terminal is among the top five on the East Coast when measured by rail container throughput. Last year it handled more than 300,000 containers that were destined for rail. CSX lacks on-dock access to the terminal. Some 26,000 containers did make their way to CSX via local truck moves.
CSX filed suit against NS and NPBL in federal court in October 2018. The district court concluded that CSX presented substantial antitrust claims — but it dismissed CSX’s complaint because the railroad waited too long to bring its suit.
In its defense, NS argued that its predecessor railroads previously granted NS control of the NPBL, which made it immune from CSX’s anticompetitive conduct claims. The court referred this matter to the STB.
Regulators in 2022 found that NS had never obtained the necessary STB approval to control the NPBL. The STB said it expected the railroads to address the “unauthorized control issue” after resolution of the district court proceeding and any appeals. CSX appealed the district court’s verdict to the U.S. Supreme Court, which has yet to issue a decision.
Last month Norfolk Southern sought STB permission to control the NPBL. The minor transaction, NS said, would bless “a corporate and shareholder structure that has been in place since 1982.”
CSX asked the board to reject the NS application “because there are serious, extensive, and long-standing competitive issues that are inappropriate for a ‘minor’ control proceeding.”
CSX also told the board that after the Supreme Court issues a decision and settles legal matters surrounding its lawsuit, the railroad intends to ask the STB to impose several remedies to address what it calls Norfolk Southern’s “unauthorized control” of NPBL.
They include:
- Granting CSX direct terminal trackage rights to NIT.
- Awarding CSX damages and imposing civil penalties on NS.
- Ordering NS to restore a 0.9-mile connecting track “that NS unlawfully removed without obtaining the required abandonment authority.”
The Port of Virginia also has asked the STB to take a closer look at the proposed NS transaction.
NS declined to comment on the CSX filing. The Justice Department did not respond to an email seeking additional details about its investigation.
Now DOJ is worried about the antitrust laws? Where were you when we let American railroads merge down to just 4?
This is a robber baron war and they need to give CSX access to the ports. Right now CSX cannot go into Norfolk if they want to send anything overseas they’re going to have to either send it up to Baltimore which is currently under construction or they are going to have to go about 200 miles south to Charleston which is over capacity. NS give CSX access to the port stop this rubber band greed now!
Back before the L&N acquired the Monon in 1971 they had offered themselves to the Southern. Nine years later when the Family Lines and Chessie filed to form CSX the Southern reversed themselves and now wanted the Monon as a condition of the CSX merger. The ICC told them to kick rocks, they had their chance. Looks like this is a similar case.
Of the eight railroads that formed the NPBL four were predecessors of NS, three would go into CSX and one was part of the PRR that went down the Delmarva Peninsula. The agreement CSX is bellyaching about was done in 1982. The ConRail split in the late 1990s was the time to redress this but CSX of that era couldn’t see that far ahead. So, too bad, so sad.
Probably way to much behind the scenes to have an inkling of what is really going on but the thing that sticks out, not discussed to me. What does Port of Virginia think of all this?
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I image in the Port’s world they would absolutely positively want NPBL providing shared competitive access and that access leading a better overall price for a container to land at there Port vs. say Baltimore or say Charleston..
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At same time Port probably tired of the drama and the reality is the Port’s money is getting the container ship to the dock and offload/onload as many TEUs as possible not so much about what truck or rails they end up on..
None of the government’s business.
Au contraire… railroads are federally regulated entities. Yes, most competitive aspects were deregulated way back in the Carter administration, but these kinds of disputes are definitely within the scope of STB and legal jurisdiction.
It is great to see DOJ initiating an antitrust investigation. Bring it on! The class 1s operate as monopolies or colluding oligopolies. They hate competition in their walled gardens (as is the case of NS & NPBL) and pretend trucks don’t exist. Customers, the public and environment pay the price for the self-serving behaviors of over compensated executives and their Wall Street masters.