A $29 Billion Rail Deal Is Too Big to Skirt Scrutiny
Canadian Pacific and Kansas City Southern's merger is most likely in the public interest, but they should still have to meet the toughest regulatory standards.
Increased government scrutiny complicates a big rail deal.
Photographer: Luke Sharrett/Bloomberg
Pushback from the U.S. Justice Department complicates the proposed railroad megamerger between Canadian Pacific Railway Ltd. and Kansas City Southern, but the regulator has a point.
Canadian Pacific agreed last month to acquire Kansas City Southern for about $29 billion including the assumption of debt. The primary regulator for the railroad industry is the Surface Transportation Board, which has the final say over whether any deal can go ahead. But in a letter Monday, the Justice Department asserted a “statutory right to intervene” and outlined its thoughts on how the railroad regulator should go about reviewing what would be the largest ever merger between two major North American carriers.