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KOHL’S RAILROAD COMPETITION BILL ADVANCES THROUGH SENATE JUDICIARY COMMITTEE

 

 

As shippers are squeezed by high freight railroad prices,

businesses’ costs go up, jobs are put at risk, and consumers pay more

 

WASHINGTON – By  a vote of 14 to 1, the Senate Judiciary Committee today passed the Railroad Antitrust Enforcement Act, U.S. Senator Herb Kohl’s bipartisan bill 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 legislation 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.  Kohl is chairman of the Senate Antitrust, Competition Policy and Consumer Rights subcommittee.

“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 shippers are forced to pass these price increases into the price of their products, and ultimately, to consumers.”    

 

Rapid consolidation in the railroad industry has resulted in only four Class I railroads providing nearly 90 percent of the nation’s freight rail transportation, as measured by revenue.   Three decades ago there were 42.    

  

Kohl’s Railroad Antitrust Enforcement Act was passed unanimously by the Senate Judiciary Committee on March 5, 2009 and was pending on the Senate calendar for debate when Congress adjourned last year.

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.  Private parties have no right to obtain injunctions to halt anti-competitive practices.   Kohl’s bill will eliminate these and other 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 agency where they belong, the Justice Department’s Antitrust Division.  And it will eliminate the antitrust exemption for railroad collective rate making.

            Kohl’s legislation is cosponsored by the Chairman of the Senate Judiciary Committee, Patrick Leahy (D-VT) and Senators Orrin Hatch (R-UT), Charles Schumer (D-NY), Amy Klobuchar (D-MN), Jon Tester (D-MT), David Vitter (R-LA) and Al Franken (D-MN).