The Rising Influence of Rising Affluence

[DewDiligence]

Senate Committee Seeks to Revoke Railroad Antitrust Exemption

[These machinations will likely turn out to be much ado about nothing, but they affect the stocks of the four main US railroads in the short haul. (Heheh—get it?)]

http://www.reuters.com/article/2011/03/03/railroad-antitrust-idUSN0325211520110303

›WASHINGTON, March 3 (Reuters) - The U.S. Senate Judiciary Committee approved legislation on Thursday that would strip freight railroads of their antitrust exemptions.

The measure in the Democratic-led Senate was approved 14 to 1, but its future was uncertain in the Republican-led House of Representatives. Similar proposals approved by the Judiciary panel previously failed to become law.

Proponents of the legislation are critical of rail industry consolidation that has left four companies providing nearly 90 percent of U.S. freight transportation and shippers complaining of rate overcharges.

Union Pacific Corp (UNP), Berkshire Hathaway Inc's (BRK-a.) Burlington Northern Santa Fe, CSX Corp (CSX) and Norfolk Southern Corp (NSC) are the major freight hauling railroads. [UNP and Burlington operate mainly west of Chicago, while CSX and NSC operate mainly east of Chicago.]

They have a limited antitrust exemption under federal law and are permitted to negotiate rates with their customers, as opposed to having rate increases fixed by regulators.

Some shippers -- those with no good alternative to rail transport -- complain they have been gouged by an industry that can afford to charge more competitive rates for moving goods. These include agricultural, chemical, coal and steel companies and utilities.

Rail transports roughly 40 percent of domestic freight.

The railroads say they do not overcharge for freight, and increased regulation would add costs that would hamper the industry's ability to sustain and increased regulation would add costs that would hamper the industry's ability to sustain and build its network and capacity.‹