The US Surface Transportation Board (STB) should force CSX Transportation to sell its stake in Pan Am Southern as part of its proposed acquisition of New England regional Pan Am Railways, the Justice Department stated on Thursday, August 26.
The Pan Am Southern is the joint venture between Pan Am Railways and Norfolk Southern, which provides NS with access to the Boston area via the former Boston & Maine main line from the Albany, New York, area to Ayer, Massachusetts. The Pan Am Southern also includes Pan Am’s north-south route along the Connecticut River from Vermont to Connecticut.
CSX and NS agreed that a new Genesee & Wyoming subsidiary, the Berkshire & Eastern, would be named the neutral operator of Pan Am Southern as part of CSX’s proposed acquisition of Pan Am Railways.
But the Justice Department stated there are still competitive concerns because CSX would own its own route into New England, the former Boston & Albany, while stepping into Pan Am Railways’ stake in the parallel Pan Am Southern.
“The proposed transaction would give CSX both control over the operating entity on a competing line and a 50% stake in the track and physical infrastructure of that line. This arrangement is likely to diminish competition between CSX and PAS on these parallel routes,” the Justice Department wrote in a filing with the STB. “Additionally, the transaction may allow CSX to impair the ability of its remaining rival, NS, to effectively compete. Although NS owns, and will continue to own, the other 50% of the PAS line, CSX could potentially hamstring its rival through its stake in PAS and its control of the joint venture’s operating entity. Because certain joint venture customers will purchase service attributable to NS, CSX could undermine NS notwithstanding the joint venture by sabotaging this service and expecting to recapture traffic on its independent line.”
The Justice Department also raised concerns about a reduction in competition in the north-south Knowledge Corridor along the Connecticut River from White River Junction, Vermont, through Massachusetts, and into Connecticut.
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