North American Railroads: First Thoughts on Second Supplemental Filings from UP/NS

研报英文原文证据摘录

North American Railroads: First Thoughts on Second Supplemental Filings from UP/NS

rcially feasible. We appreciate that shipper access is

complicated and the Board asked how pre-merger competition will be maintained, but we

still believe these arrangements need to show they will enhance competition.

• The long-awaited downstream analysis did not disappoint. We have been surprised

that neither application included the analysis of downstream implications, with UP/NS

essentially stating that they did not feel compelled to complete the exercise. These

supplementals mapped out customer facility overlaps for every plausible future Class I

merger (excluded CN-CPKC), flagging BNSF-CPKC as the only combination with

material horizontal overlap, while characterizing the rest as essentially end-to-end and

manageable with traditional remedies. The applicants also outlined five constraints on

the Board’s authority to impose forward-looking conditions, emphasizing that any

“springing” remedies for future mergers should be narrowly defined now and not left

open-ended. Unsurprisingly, the applicants believe that further mergers will strengthen

competition and we await the interesting debates on why forward looking conditions for

downstream implications should be limited when more consolidation is almost

guaranteed if UP/NS merge.

• Final pitch for prima facie case and next steps. The Board’s assertion that it may

include an evaluation as to whether the Applicants presented a prima facie case (details

here) introduced the possibility that the Amended Application and supplemental

materials could still be viewed as insufficient to support a finding that the transaction is

in the public interest (and does not affirmatively demonstrate that it is not). Whether or