Railroads sued for price-fixing
By Staff -- Purchasing, 6/14/2007 2:00:00 AM
Dust Pro Inc. may be the shipper's David to take on the railroad's Goliath.
The small privately-owned Phoenix-based manufacturer of soil stabilizers has filed a federal lawsuit in New Jersey seeking class action status, claiming that five U.S. railroads colluded on prices of fuel surcharges.
In short, the suit alleges that the fuel surcharges being levied by the railroads did not reflect fuel prices. "In a competitive environment, free of collusion, carriers with lower fuel costs would impose a lower surcharge to obtain a competitive advantage," the complaint said.
According to Reuters, the suit claims the alleged price fixing started in mid-2003 and allowed the railroads to curb competition in the market for unregulated rail freight transportation services.
The Wall Street Journal says the suit claims "restrained competition in the market for unregulated rail freight transportation services," causing customers to be overcharged billions of dollars.
The rail carriers named in the suit are: CSX Corp., Burlington Northern Santa Fe, Kansas City Southern, Norfolk Southern and Union Pacific.
Earlier this year, the Surface Transportation Board issued a final rule in January on the way railroads calculate fuel surcharges, declaring it an "unreasonable practice for railroads to compute fuel surcharges in a manner that does not correlate with actual fuel costs for specific rail shipments."
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