A recently introduced bill in the U.S. Senate aims to eliminate antitrust exemptions in the rail industry, which according to the American Chemsitry Council, provides railroads with “unique government protections that help shield them from free markets and competition.”
Sens. Amy Klobuchar, D-Minn., and David Vitter, R-La., introduced the bill Thursday.
If passed into law, the Railroad Antitrust Enforcement Act would, the senators say, eliminate a “captive shipping” environment where some shippers only have access to one rail company. According to a press release, four Class I railroads account for more than 90 percent of the nation’s business. A study by the Consumer Federation of America pointed out that this leads to increased costs for shippers and that “captive shippers” end up paying much higher rail rates, which are then passed on to consumers.
The bill, Klobuchar said, would promote fairness and competition in the industry.
“It’s simply unfair that companies like Blandin Paper Co. in Minnesota pay higher prices because railroads enjoy an exemption from the antitrust laws,” Klobuchar said in a statement. “This legislation makes commonsense reforms that will require the railroad industry play by the same antitrust rules as other industries and will help keep costs down for businesses, farmers and consumers.”
Steve Sharp, Consumers United for Rail Equity’s president, said antitrust laws are enacted to ensure competitive markets, and the rail industry is no longer competitive. He added shippers are in full support of the bill.
“No American industry other than Major League Baseball enjoys such a broad exemption from our nation’s antitrust laws, which has led to a lack of competition in the national freight rail system that has hurt American producers and manufacturers, local communities, American workers and the national economy,” he said in a statement. “Consumers ultimately pay the freight for railroad monopoly power in terms of inflated prices for electricity, food and the goods they purchase.”
Congressmen on both sides of the aisle have been trying to pass the Railroad Enforcement Act for years. Last February, Sen. Herb Kohl, D-Wis., tried to add railroad antitrust reconfigurations as an amendment to the MAP-21 bill after an effort to introduce the issue as its own bill failed in 2007. In 2009, members of the House tried to pass a similar version of the bill.
In each instance, the Association of American Railroads spoke out against the action, saying it would bring harmful impacts onto railroads, shippers and consumers. - Jon Ross