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ToolsRelated topicsResourcesCompetition Bureau obtains remedies in BC Rail mergerBackgroundOn November 25, 2003, the Government of British Columbia announced that Canadian National Railway ("CN") was the successful bidder to operate BC Rail. Under the terms of the transaction, CN will acquire all the shares of BC Rail Ltd. and partnership units in the BC Rail Partnership and the long-term right to operate over its railbed. The B.C. Government will retain ownership of the track and railbed with CN assuming responsibility for rail transportation and infrastructure maintenance. The Competition Bureau conducted a comprehensive merger review to determine the competitive effects of this very complex transaction. The Bureau contacted market participants and gathered information from a wide range of sources, including shippers with facilities located on or near the BC Rail network, reload operators performing truck-rail movements, competing railways and other stakeholders. The transaction raised serious competition issues in two main areas: rail interline transportation of commodities, such as lumber, between the BC Rail territory and various markets throughout North America and rail transportation of grain from the Peace River area. The Bureau's policies and practices regarding the treatment of confidential information limit its ability to disclose specific information obtained during the course of a merger review. However, general findings on the relevant competition issues are summarized below. Rail Interline TransportationShippers on the BC Rail line have been able to reach various markets in North America by routing their traffic through CN at Prince George or through Canadian Pacific Railway Company, Burlington Northern and Santa Fe Railway Company or Union Pacific Corporation in Vancouver. Maintaining these competitive options was a major concern for the Bureau. The Consent Agreement [PDF] provides the following remedies:
Open Gateway Rates
Transportation of Grain from the Peace River AreaPre-merger, CN and BC Rail competed vigorously through rates and services provided to grain elevators located on their respective lines at Dawson Creek, B.C., and Rycroft in north-western Alberta. The Consent Agreement includes the following remedies which are aimed at preventing CN from materially increasing rates or curtailing service levels in the transportation of grain from the Peace River area:
Monitoring and ComplianceUnder the Consent Agreement, the Commissioner of Competition has specific authority for the purpose of assessing and securing CN's compliance with its commitments. The Commissioner may appoint a monitor with the authority to obtain records from CN and interview CN officials, and designate an auditor to examine CN records to ensure compliance. Competition Bureau
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