Coal Shipper Sues UP, BNSF for Price-Fixing

Coal and coke mining firm Oxbow Mining is suing the two largest U.S. railroads, Union Pacific Railroad and BNSF Railway, alleging they engaged in monopoly behavior and price-fixing in violation of antitrust laws “to gouge customers with high rates.”

Both railroads rejected the allegations and planned to vigorously fight the suit, which was filed in U.S. District Court in Washington, D.C.

By the Numbers: U.S. Rail Cargo.

Oxbow also alleged the two carriers colluded with eastern railroads CSX Transportation and Norfolk Southern Railway to set up fuel surcharges that go beyond actual fuel costs to effectively increase freight pricing. That issue is already being tested in a separate suit by various shippers seeking class action status, and the railroads all reject those allegations as well.

“BNSF has not colluded or conspired in violation of any law,” a spokesman for BNSF, which is owned by Berkshire Hathaway, said. As for details of the allegations, he said “we will respond through the legal process after we have had an opportunity to fully review the complaint.”

A UP spokesman said that company “vigorously denies the allegations in the complaint. Union Pacific has not violated the antitrust laws. Also, Union Pacific has not conspired with any other railroad to fix prices or reduce competition for rail transportation of any customer or commodity.”

Oxbow Chairman and CEO Bill Koch charges that UP and BNSF “have systematically gouged their customers, and the result is higher prices for everybody — from companies that rely on them to ship their goods to the consumers who buy products shipped on those lines.”

Oxbow also tied the suit to the larger rail shipper community, saying a favorable ruling for that company could benefit “all of America’s shippers and consumers, savings billions of dollars a year in reduced rail freight charges.”

The UP spokesman said Oxbow had “long been threatening Union Pacific with litigation unless UP acceded to Oxbow’s demands for exceptional commercial concessions.” He also said the suit offers “a grab bag of accusations” that mirror complaints in a current Surface Transportation Board proceeding on rail competition.

The UP spokesman added that the company has “made all decisions relating to competing for rail business and pricing our services to reflect the value they provide to our many customers, including coal customers like Oxbow, independently and in full compliance with the law.”

-- Contact John D. Boyd at jboyd@joc.com. Follow him on Twitter @jboydjoc.