Senate Panel Backs End to Railroads' Antitrust Exemptions

Freight railroads are getting some unwelcome attention on Capitol Hill.

This week, the Senate Judiciary Committee passed a bill to repeal limited antitrust exemptions for U.S. railroads. And the Senate Commerce Committee is considering legislation to subject railroads to greater scrutiny from the Surface Transportation Board.

"We face two disparate schemes that spell nothing but confusion for the railroads and those charged with enforcing the regulations," said Association of American Railroads President and CEO Ed Hamberger. 

The Senate committee cleared with no changes The Railroad Antitrust Enforcement Act of 2009, a measure championed by Sen. Herb Kohl (D-Wis.) to address concerns that freight railroads are abusing their market power. In a statement, Senator Kohl said that the goal of the legislation is to remove obsolete provisions in the law that protect railroads from competition and allow them to overcharge captive shippers.

"Our bill will ensure that railroads play by the same rules as all businesses in our economy and give those injured by anti-competitive conduct strong remedies under antitrust law," Kohl said. "Over the past several years, railroad shippers of vital commodities have faced spiking rail rates. Rail customers are forced to pass these price increases along into the price of their products, and ultimately, to consumers."

The bill would allow the federal government, state attorneys general or private parties to sue railroads to block mergers and acquisitions that are deemed anti-competitive, and return rail merger regulatory reviews to the jurisdiction of the Justice Department's Antitrust Division and the Federal Trade Commission.

Hamberger argued that all aspects of railroad practices exempt from antitrust laws are subject to STB jurisdiction. "Eliminating the railroads' exemptions would not fill any void in the law.  It would, however, create a scenario where multiple agencies have overlapping authority over railroads.  There is no justification for singling out railroads in this manner," he said.