New Roadblocks for A Big Rail Deal

Kansas City Southern investors are right to worry that the Biden administration’s tougher stance on antitrust enforcement may signal trouble for the company’s $34 billion plan to sell itself to Canadian National Railway Co.

- Brooke Sutherland

On July 9, President Joe Biden signed an executive order aimed at curbing abuses of pricing power in consolidated industries. The directive is broad, targeting sectors including agricultural equipment makers and banks in an apparent attempt to signal that the shift in tone goes far beyond the technology sector that’s borne the brunt of public antitrust criticism. It’s still notable that railroads were included in the order. Seven providers dominate the industry, and the physical nature of rail infrastructure makes it more difficult for shippers to price-shop from one company to the next. But while most of the other sectors mentioned in the order have seen a rash of deals in recent years, there hasn’t been a sustained effort to win regulatory backing for a major combination of two North American railroads since the 1990s. Until now, that is.