Antitrust lawsuit against railroads dismissed

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Associated Press

Posted on March 1, 2013 at 3:02 PM

OMAHA, Neb. (AP) — A federal judge has dismissed a lawsuit that accused Union Pacific and BNSF Railways of price fixing.

Oxbow Carbon & Minerals LLC said in its lawsuit that the two biggest railroads in the western U.S. worked to avoid direct competition with each other to keep rates high, and that Union Pacific has refused to ship coal from its Oxbow's Elk Creek Mine in western Colorado to avoid competing with BNSF.

The lawsuit brought by Oxbow and six of its companies also said the railroads' fuel surcharges aren't based on actual costs and simply raise shipping rates.

But U.S. District Court Judge Paul Friedman said in an opinion Tuesday that Oxbow failed to present adequate facts to back their allegations of price fixing.

The judge noted that Oxbow seemed to acknowledge the railroads' argument that Oxbow's coal operations did not pay a uniform standard fuel surcharge, but a fluctuating, coal-specific fuel surcharge. The Oxbow companies failed to include any facts about each of its business operations, including which companies purchased freight transportation from the railroads or which ones claimed to have paid the surcharge, Friedman said.

He also rejected Oxbow's claim that the railroads conspired to form a "shared monopoly," in which the railroads agreed not to compete with each other in certain regions in order to keep shipping rates high.

"Plaintiffs do not once explicitly specify which market UP and BNSF allegedly agreed to allocate to UP, but rather suggest that UP and BNSF continued to serve their respective incumbent customers within the same markets," Friedman wrote.

"Without basic factual information" about the alleged conspiracy, the judge wrote, Oxbow's allegations aren't enough for the court to find against the railroads.

BNSF spokesman Steve Forsberg said his company was still studying the opinion Friday and that BNSF is "generally pleased with the judge's decision and actions."

UP spokeswoman Raquel Espinoza declined to comment on the lawsuit or its dismissal.

After the lawsuit was filed in 2011 in a federal court in Washington, D.C., both railroads defended their pricing practices and denied the lawsuit's allegation.

The lawsuit was dismissed without prejudice, meaning Oxbow can refile the complaint.

Attorneys for Oxbow did not immediately return messages left Friday, but Oxbow spokesman Brad Goldstein said the company will refile the lawsuit, amended to reflect the judge's concerns.

"Oxbow ... will move forward to hold UP and BNSF accountable for their allegedly illegal and anti-competitive behavior," Goldstein said.

Union Pacific is headquartered in Omaha, Neb. BNSF is based in Fort Worth, Texas, but is part of Warren Buffett's Omaha-based Berkshire Hathaway Inc.

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