CP says CN’s request to gain KCS Springfield Line is “without merit”

WASHINGTON — Canadian Pacific wants federal regulators to toss out Canadian National’s request to gain control of Kansas City Southern’s line linking Springfield, Ill., and Kansas City, Mo., as a condition of the CP-KCS merger.

CN’s proposal for divestiture of the line is “without merit,” CP argued in a Jan. 28 filing with the Surface Transportation Board. There is no precedent for forcing a line sale as a condition of an end-to-end merger that does not cause any loss of competition, CP wrote. And there’s no reason to include the potential divestiture in the environmental review of the CP-KCS merger, CP said.

“The review of the CP/KCS transaction — including the extensive environmental review that is well underway — should not be delayed by the highly speculative and contingent divestiture scenario that CN presents,” CP wrote in its filing. “Before there could be any environmental impact arising from CN’s proposed divestiture, CN would first have to convince the Board to mandate a sale of the Line and CP would have to choose CN as the purchaser — contingencies that are highly unlikely to be realized.”

CN told the STB earlier this month that it intended to file a so-called responsive application that would officially request divestiture of the KCS former Gateway Western trackage linking Springfield with Kansas City and East St. Louis, Ill. CN said it would spend $250 million to improve the trackage and tie it to the former Illinois Central Gilman Subdivision to create a new single-line route from Kansas City to Michigan and Eastern Canada.

CP says CN’s divestiture request is its latest effort to “delay or disrupt the CP/KCS transaction.”

CP urged the STB to reject CN’s request that the potential divestiture be included in the ongoing environmental review of the CP-KCS merger. “No purpose would be served by undertaking an environmental review of a CN line purchase that probably will never occur,” CP wrote.

As part of the 1996 merger of Union Pacific and Southern Pacific, CN sought and failed to have the STB force UP to give CN direct access to KCS in Springfield, CP noted.