For Immediate Release
(202) 224-5653
SENATE JUDICIARY COMMITTEE APPROVES KOHL BILL TARGETING RAILROAD ‘PRICE GOUGING’ THAT DRIVES UP CONSUMER COSTS
WASHINGTON – The Senate Judiciary Committee today approved legislation sponsored by U.S. Senator Herb Kohl to repeal the obsolete antitrust exemptions protecting freight railroads from competition. These exemptions deny rail consumers antitrust protections available to consumers in virtually every other industry. Kohl introduced the Railroad Antitrust Enforcement Act of 2009 in response to concerns that freight railroads are abusing their dominant market power and raising rates for those who rely on them to ship dozens of vital commodities, including coal and agricultural products. Committee co-sponsors of the legislation are Senators Russ Feingold (D-WI), Patrick Leahy (D-VT), Amy Klobuchar (D-MN), Charles Schumer (D-NY), and Ted Kaufman (D-DE), and was reported out of the Judiciary Committee by a vote of 14 to 0.
“Our bill will ensure that railroads play by the same rules as all businesses in our economy and give those injured by anti-competitive conduct strong remedies under antitrust law,” Kohl said. “Over the past several years, railroad shippers of vital commodities have faced spiking rail rates. Rail customers are forced to pass these price increases are passed along into the price of their products, and ultimately, to consumers. Our bill will enact a simple and straightforward remedy – eliminate the outmoded antitrust exemptions.”
Over the last 20 years, railroad industry consolidation has reached the point where only four class I railroads provide over 90 percent of the nation’s rail transportation. Many industries – known as “captive shippers” -- are served by only one railroad. These captive shippers have faced constantly rising rail rates. In many cases the ordinary protections of antitrust law are unavailable to these captive shippers – instead, the railroads are protected by a series of exemptions from the normal rules of antitrust law to which all other industries must abide.
As an example, Dairyland Power in La Crosse serves the electricity needs of more than 575,000 people. Several years ago, Dairyland was hit with a 93% rate increase - resulting in about $35 million of increased cost.
Current antitrust law protects a wide range of railroad industry conduct from scrutiny by antitrust enforcers. Railroad mergers and acquisitions are exempt from antitrust law and are reviewed solely by the Surface Transportation Board. Railroads that engage in collective ratemaking are also exempt from antitrust law. Kohl’s bill will eliminate these antitrust exemptions by allowing the federal government, state attorneys general and private parties to file suit to enjoin anti-competitive mergers and acquisitions. It will restore the review of these mergers to the agencies where they belong – the Justice Department’s Antitrust Division and the Federal Trade Commission. And it will eliminate the antitrust exemption for railroad collective rate making.
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