CN Railway agrees to a remedy in its successful bid to operate BC Rail Ltd.
On November 25, 2003, the British Columbia Government granted Canadian National Railway Company (“CN”) the right to acquire all of the shares of BC Railway Ltd. (“BC Rail”), partnership units in the BC Rail partnership and a long-term licence to operate its railbed. In its review, the Competition Bureau concluded that the proposed transaction raised serious competition issues for rail interline transportation of commodities (e.g., lumber) and rail transportation of grain from the Peace River area.
In the consent agreement, CN agreed to open gateway rates by both publishing and maintaining tariffs inclusive of connection charges for each of BC Rail’s five distinct geographic zones and four different load weight categories. It also agreed to adjust rates annually based on an industry index; however, published rates could not be adjusted below initial levels.
With respect to transit times, CN agreed to chart its performance against the 2003 BC Rail average transit time data, and would face financial penalties if performance benchmarks were not met. The performance targets applied for the five year period post-closing, with the first year being a penalty-free transition period followed by a four-year period with the penalty regime in place. The Commissioner of Competition also reserved the right to reinstate the penalty regime for an additional five years if she determined that the transit time covenants had not been respected.
The consent agreement also included safeguards to ensure shippers were not discriminated against with respect to car allocation.
Finally, in order to preserve competition in rates and services for the transportation of grain, certain remedies were introduced that aimed to prevent CN from materially increasing rates and curtailing service levels in the Peace River area. The consent agreement was registered on July 2, 2004.
