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Business & Technology

Lawsuit claims five major rail companies conspired to fix prices

May 14th, 2007 8:27 pm by Associated Press



NEWARK, N.J. - Five major freight railroads conspired to fix prices by adding rail 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.


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


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


Although none of the parties in the lawsuit are based in New Jersey, the five railroads have offices or rail line in the state.


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 cost increases.


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.


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