Two articles about alleged price-fixing by UP and BNSF. The first article is a combination of Associated Press (AP) articles that were reported in several newspapers on June 7 & 8. The second article, which goes into more detail, is from an Omaha newspaper on June 9th.
OMAHA, NEB. — Oxbow Mining is filing a federal antitrust lawsuit against Union Pacific and Burlington Northern Santa Fe, saying the railroads conspired to raise prices on customers like the Colorado coal mine that Oxbow runs.
In the suit filed Tuesday (6/7/11) Oxbow says the two biggest railroads in the western U.S. worked to avoid direct competition with each other to keep rates high.
Oxbow’s Chairman and CEO Bill Koch says the railroads have been systematically gouging their customers for years, and higher shipping costs are passed on to consumers.
Oxbow also complained that the fuel surcharges both railroads charge aren’t based on costs and simply help the railroads raise shipping rates.
Union Pacific spokesman Tom Lange said Wednesday the Omaha-based railroad denies the allegations and says the lawsuit includes several factual errors.
Lange says Oxbow has been threatening to file a lawsuit if UP didn't agree to significant concessions.
BNSF spokesman Steve Forsberg wouldn't comment on the lawsuit itself Tuesday, but he defended the Texas railroad's business practices and said BNSF has not conspired to violate any law.
Omaha World-Herald
UP, BNSF deny price-fixing
June 9, 2011
By Ross Boettcher
WORLD-HERALD STAFF WRITER
Omaha-based Union Pacific Railroad rejects allegations in a lawsuit that accuses it and BNSF Railway Co. of breaching federal antitrust laws by colluding with other major railroads. BNSF also rejects the allegations.
Union Pacific Railroad on Wednesday vehemently rejected a lawsuit's claims that the Omaha-based railroad and BNSF Railway Co. breached federal antitrust laws through price fixing and collusion with other major railroads.
The lawsuit, filed Tuesday by Oxbow Mining, an international mining and energy company, said U.P. and BNSF, whose parent company Burlington Northern Santa Fe Corp. is owned by Warren Buffett's Berkshire Hathaway, benefited from establishing steep fuel surcharges and preventing customers from negotiating long-term deals. Both railroads are major employers in Nebraska.
After reviewing the lawsuit, U.P. spokesman Tom Lange said Wednesday that the complaint, which he called a “grab bag of accusations,” was not a surprise, saying that Oxbow long has threatened litigation unless U.P. met the company's demands for “exceptional commercial concessions.”
Lange said U.P. has not violated antitrust laws or conspired with other railroads named in the lawsuit — BNSF, CSX Transportation and Norfolk Southern — to reduce competition or fix prices.
“Union Pacific values its business relationship with Oxbow and all customers,” Lange said in a statement. “However, Oxbow's complaint contains egregious misstatements of facts, erroneous accusations, and obvious misunderstandings of federal regulation, rail networks and markets.”
Later Wednesday, Palm Beach, Fla.-based Oxbow responded to the U.P. statement: “Union Pacific and BNSF are free to make all the public denials one would expect from them, but Oxbow is not the first company to make these accusations and seek relief — dozens of companies have complained, in fact, in various legal proceedings.”
BNSF spokesman Steven Forsberg said Tuesday that BNSF, based in Fort Worth, Texas, “has not colluded or conspired in violation of any law” and “will respond through the legal process.”
U.P. has addressed similar legal accusations since 2007. Many of those allegations are related to the Staggers Rail Act, which was passed in 1980 by Congress to limit competitive regulation on a financially strapped railroad industry.
Now that railroads are seeing record net income and increasing profit margins, companies like Oxbow say those rules need to be reformed to increase competition and drive down transportation prices.
The same issue will be addressed at a federal Surface Transportation Board hearing on June 22. The Surface Transportation Board is the agency that regulates the country's railroads, and the hearing is expected to involve trade groups and companies, including railroads, chemical companies, mining firms, paper manufacturers and grain and feed representatives.
In relation to those proceedings and the Oxbow lawsuit, U.P. said it has made all business and pricing decisions to “reflect the value they provide to our many customers ... and in full compliance with the law.”
“We intend to vigorously defend our actions against Oxbow's allegations,” Lange said.
According to Reuters reports, there are multiple similar cases claiming excessive railroad fuel surcharges that are awaiting a decision from the same U.S. District Court in Washington, D.C., on whether they should be combined and given class status.
Whether through legal action or political reform, the rail industry could see changes coming down the tracks.
A report last fall from the Senate Commerce Committee suggested that the federal government should take a look at the new, profitable economic landscape for rail operators and consider policy changes that might be needed to draw down prices and bolster competition among the nation's major railroad operators.
“The railroads have high levels of capital investment and consistently produce strong results for their shareholders throughout the economic cycle,” the report said. “As Congress and the federal government look to the nation's rail system to meet the United States' future transportation needs, they also need to evaluate whether our country's current rail policy needs to be changed to reflect this new reality.”