Canadian National has made its final pitch to regulators for preliminary approval of its $33.6 billion acquisition of Kansas City Southern railroad, a deal that has the potential to lead to a passenger rail line between Baton Rouge and New Orleans.
Earlier this spring, the Surface Transportation Board indicated it would take a cautious approach in approving CN acquisition plant, which has drawn opposition from rival Canadian Pacific railroad and hundreds of commenters who raised concerns about the merger hurting competition, specifically because both CN and KCS currently own lines running between Baton Rouge and New Orleans.
That’s where Louisiana’s passenger rail opportunity comes in. CN says it can address the competitive concerns through its operating plan and by selling 70 miles of track between New Orleans and Baton Rouge where KCS’s network directly overlaps with CN’s tracks. Left to be decided is who might buy the line if and when it becomes available, as previously reported by Daily Report. Still, Louisiana advocates of passenger rail between the state’s two largest cities say the deal is significant because it opens the doors to numerous possibilities.
The merger’s approval, even with CN’s effort to assuage concerns about unfair competition, is far from set in stone, and there are still several hurdles to surpass before the 70 miles of Louisiana railway could be purchased from CN. The Surface Transportation Board’s current merger rules haven’t been tested because it hasn’t approved any major railroad mergers since the 1990s. The board has generally said that any deal involving one of the nation’s six largest railroads needs to enhance competition and serve the public interest to get approved. The board has also said it would consider whether any deal would destabilize the industry and prompt additional mergers.