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Should conditions regarding non-discrimination be imposed in vertical mergers? The Surface Transportation Board on the acquisition of the Kansas City Southern Railway by the Canadian Pacific

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  • Pittman, Russell

Abstract

In its 2023 decision approving the acquisition of the Kansas City Southern Railway by the Canadian Pacific, the U.S. Surface Transportation Board conditioned its approval on the merged railway’s commitment “to keep gateways open on commercially reasonable terms” – that is, to allow shippers and non-merging railroads to continue to enjoy the option of using joint-line service, despite the merger’s creation of the alternative of single-line service on the merged railroad. A century has passed since the Board’s predecessor agency, the Interstate Commerce Commission, first imposed a condition of the maintenance of open gateways as a condition for approving a rail merger. This paper asks three questions. First, exactly what, in practice, are open gateways? Second, how have the two regulatory agencies dealt with the inherent tension between maintaining open gateways and achieving merger efficiencies? Third, what is the current state of play?

Suggested Citation

  • Pittman, Russell, 2024. "Should conditions regarding non-discrimination be imposed in vertical mergers? The Surface Transportation Board on the acquisition of the Kansas City Southern Railway by the Canadian Pacific," MPRA Paper 123063, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:123063
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    File URL: https://mpra.ub.uni-muenchen.de/123063/1/MPRA_paper_123063.pdf
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    References listed on IDEAS

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    6. Carl Shapiro, 2021. "Vertical Mergers and Input Foreclosure Lessons from the AT&T/Time Warner Case," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 303-341, September.
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    Keywords

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    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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