CURE :: Consumers United For Rail Equity

Senate Committee: Railroad Antitrust Exemption Must End
Bill Would End Monopoly Abuse of Rural Customers, CURE Says

Farm World
By Tim Alexander
March 18, 2009

Railroad Antitrust Enforcement Act of 2009: Highlights

* Repeal the railroads' exemption from U.S. antitrust law.
* Permit the U.S. Dept. of Justice and Federal Trade Commission to review mergers under antitrust law.
* Ensure STB rulings and regulations conform to U.S. antitrust law.
* Pursue court orders to halt anti-competitive conduct.

Author: Sen. Herb Kohl (D-WI).

WASHINGTON, D.C. - Federal legislation that would end railroad companies' exemption from U.S. antitrust regulations was approved by the Senate Judiciary Committee March 5, paving the way for an end to monopoly power that proponents of the bill say the companies use to artificially increase the price of products moved by rail. The Railroad Antitrust Enforcement Act of 2009 (SB-146), authored by Sen. Herb Kohl (D-WI), was approved by a 14-0, bipartisan vote.

"Rural America is especially hard hit by this monopoly power," said Bob Szabo, executive director and counsel for Consumers United for Rail Equity (CURE). "In many cases rural areas are served by only one freight railroad. If you need to use the railroad, you pay the price they dictate. The result is increased input costs, such as fertilizer and electricity generated from coal, and both lower dollars to the farmer for his crops that are moved by rail and higher prices for the consumer of those agriculture products."

Szabo said he expects the bill to be considered by the full Senate this year. A companion House bill (HR-233) authored by Rep. Tammy Baldwin (D-WI) is currently pending in the House Judiciary Committee and is expected to be reported favorably in the next two months.

"Legislation passed the House Judiciary Committee last year by a bipartisan voice vote, and we believe we'll have similar support this year," Szabo said. "There is a good chance that this legislation can become law even this year. With the railroads continuing to increase their rates and profitability in the midst of this deep recession, more and more rail customers, including a growing number of agricultural groups and consumers are calling on Congress to act."

Glenn English, chairman of CURE, praised the senators for their quick action in green-lighting the bill. "The railroads have used this exemption to consolidate the country's rail shipping down to four regional monopolies, giving these behemoths tremendous monopoly pricing power that results in record profits at the expense of captive shippers," he said.
The "behemoths" English speaks of-- Union Pacific Corporation, CSX Corporation, BNSF Railway and Norfolk Southern-- realized a reported $358 million increase in revenues in 2008. All four railroads also reported a decrease in the total volume of freight moved during the period, which CURE says highlights their ability to extract greater profits per shipment through monopoly pricing power.

"These monopoly railroads are putting the squeeze on captive shippers to make higher and higher quarterly profits, which result in excessive prices for everything from electricity to food for American consumers," English said. 'They are doing this when most American families can least afford price increases on basic necessities."

CURE represents a wide variety of rail customers including public utilities, rural electric co-ops, and agriculture groups, as well as chemical, ethanol, cement, forest and paper companies, in addition to other manufacturers. (www.railcure.org.)