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US steelmakers, aluminum companies sue railroads over alleged price fixing

Pittsburgh — Several US steelmakers and aluminum companies have filed a pair of lawsuits alleging the country's four largest railroad companies conspired to fix prices over a period of at least five years, according to court filings seen Wednesday by S&P Global Platts.

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AK Steel and North Star Bluescope filed a lawsuit with several other plaintiffs October 2 with the US District Court for the District of Columbia, while aluminum companies Alcoa, Arconic, Eastalco Aluminum, Intalco Aluminum, Northwest Alloys, Reynolds Metal and Alumax Mill Products filed a separate lawsuit September 30 with the US District Court for the Western District of Pennsylvania.

Both lawsuits allege BNSF Railway, CSX Transportation, Norfolk Southern Railway and Union Pacific Railroad conspired to increase the rates the plaintiffs paid for rate-unregulated rail freight transportation services during the period from 2003 through at least December 31, 2008.

"In 2003, the four largest United States-based Class I railroads engaged in an extraordinary series of meetings, phone calls, and email communications through which they embarked on a conspiracy - under the guise of a fuel cost recovery program - to apply and enforce rail fuel surcharges across their customers in order to generate profits," the complaint filed by Alcoa states.

According to AK Steel's filing with the court, the railroads claimed that the rail fuel surcharge compensated them for rising fuel costs, but in actual practice, it was not related to the actual costs the railroads paid for fuel but was instead simply a means to raise and fix the price of rate-unregulated rail freight transportation services.

"On a nationwide scale, this conspiracy enabled [the] defendants to collect billions of dollars of additional supra-competitive profits during the conspiracy," AK Steel's complaint states.

The four railroads control roughly 90% of US freight rail traffic. Requests for comment to Norfolk Southern and Union Pacific were not immediately returned Wednesday. CSX said it does not comment on pending litigation.

BNSF is reviewing the filings, according to a spokeswoman who said the allegations "are not new and we have strongly denied these accusations for well over a decade."

CF Industries, Dairyland Power Cooperative, Dyno Nobel, Entergy Arkansas, Entergy Louisiana, Exelon Generation, Steelscape and Wisconsin Electric Power are also named as plaintiffs in the lawsuit filed by AK Steel and North Star Bluescope.

The plaintiffs in both cases have requested a jury trial.

-- Justine Coyne, justine.coyne@spglobal.com

-- Edited by Tom Balcerek, newsdesk@spglobal.com

Platts University | December 9-10, 2019 | New York

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