CN bid for U.S. railway poses greater risk to competition, DOJ says

A Kansas City Southern (KCS) rail car at Toluca, Mexico on Oct. 1, 2018. (File photo: Reuters)/Edgard Garrido)
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Reuters — The U.S. Department of Justice said on Friday that Canadian National Railway’s bid for U.S. railway operator Kansas City Southern appears to pose greater risks to competition than a rival agreement with Canadian Pacific Railway.

The development comes as KCS on Thursday accepted CN’s $33.6 billion acquisition offer, upending the $29 billion deal with CP (all figures US$).

“A CN-KCS transaction poses additional dangers to competition stemming from the potential elimination of direct, ‘parallel’ competition on routes served by both railroads, for example between Baton Rouge and New Orleans,” the DOJ said in a filing with the U.S. Surface Transportation Board posted on CP’s website.

CN did not immediately respond to a Reuters request for comment.

CP said the company remained confident its friendly deal with the U.S. railroad was “the only viable merger.” It has five business days to make a new offer for KCS, and a bidding war could ensue if the company tables a new bid.

Both companies are seeking to create a North American railway spanning the U.S., Mexico and Canada.

— Reporting for Reuters by Sanjana Shivdas in Bangalore.

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