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Lawsuit claims price-fixing by 5 freight railroads

Tuesday, May 15, 2007

NEWARK, N.J. -- Five major freight railroads conspired to fix prices by adding fuel surcharges, according to an antitrust lawsuit filed Monday in U.S. District Court.

The lawsuit, which seeks class-action status, was filed by Phoenix-based Dust Pro Inc. on behalf of other parties who shipped goods on one or more of the railroads since July 2003.

The suit seeks unspecified monetary damages from the five railroads: CSX Transportation Inc., of Jacksonville, Fla., Norfolk Southern Railway Co., of Norfolk, Va.; BNSF Railway Co., a subsidiary of Burlington Northern Santa Fe Corp., of Fort Worth, Texas; Union Pacific Railroad Co., of Omaha, Neb.; and Kansas City Southern Railway Co., of Kansas City.

Both Union Pacific Railroad Co. and BNSF Railway Co. operate trains in the Southeast Missouri area. The two railroads' tracks cross each other at Rockview, near Chaffee.

One of BNSF's high-volume local clients is the 235-megawatt Sikeston Power Station, operated by the Sikeston Board of Municipal Utilities. A 115-car BNSF coal train delivers coal from Wyoming's Powder River Basin to the plant twice weekly. The fuel is bought by the Western Fuels Association, a not-for-profit corporation of municipal and cooperative-owned utilities that includes Sikeston as a member.

Sikeston Board of Municipal Utilities management was not available for comment Monday afternoon.

The lawsuit alleges the five engaged in an "unreasonable restraint of trade or commerce" in violation of the Sherman Act. It said the companies control more than 90 percent of the rail freight traffic.

Officials at the five railroads had no immediate comment on the lawsuit.

The lawsuit charged that the railroads "moved in uniform lockstep" to fix prices for the fuel surcharges, which it said had no relationship to actual fuel costs.

As a result, the railroads "restrained competition in the market for unregulated rail freight transportation services" and "realized billions of dollars in revenues ... in excess of their actual increase in fuel costs from the specific customers on whom they imposed the surcharge."

The lawsuit cited a decision by the U.S. Surface Transportation Board, which in January banned excessive fuel surcharges by railroads and imposed strict rules on the fees that many companies had credited with bolstering profits.

That ruling, however, applied only to rate-regulated shipping. The lawsuit said the majority of shipments are unregulated.

The suit was filed in the U.S. District Court for New Jersey.

Southeast Missourian staff writer Matt Sanders contributed to this report.


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