U.S. Aluminium And Steel Firms Sue Railroads On Allegations Of Price Fixing

U.S. Aluminium And Steel Firms Sue Railroads On Allegations Of Price Fixing

An array of United States aluminium and steel producers filed suit against a quartet of the country’s largest railroad firms last week alleging a conspiracy among them to inflate prices and overcharge customers for their services over the course of several years in the previous decade.

Alcoa, Alumax Mill Products, Arconic, Eastalco Aluminum, Intalco Aluminum, Northwest Alloys, and Reynolds Metal initiated legal proceedings with a lawsuit on September 30 filed in the US District Court for the Western District of Pennsylvania, followed by a suit by AK Steel and North Star Bluescope on October 2 in the US District Court for the District of Columbia.

Both suits named BNSF Railway, CSX Transportation, Norfolk Southern Railway, and Union Pacific Railroad as defendants, with AK Steel and North Star Bluescope also naming CF Industries, Dairyland Power Cooperative, Dyno Nobel, Entergy Arkansas, Entergy Louisiana, Exelon Generation, Steelscape, and Wisconsin Electric Power as defendants in their complaint.

Per the complaints, the defendant railroad companies allegedly agreed to raise rates for rate-unregulated rail freight transport between 2003 and continuing through at least the end of 2008.

Alcoa’s complaint provides further details of the allegations.

“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.”

AK Steel’s filing describes the defendant railroads’ claim that fuel surcharges made up for increased fuel costs. However, plaintiffs say there was no connection between the rise in fuel prices and the surcharges, as the surcharges were merely a mechanism by which the railroads raised rates to increase profits.

“On a nationwide scale, this conspiracy enabled [the] defendants to collect billions of dollars of additional supra-competitive profits during the conspiracy,” alleged AK Steel in its complaint.

As to the defendants, none but BNSF chose to go on record regarding the suits, saying the firm is reviewing the allegations, which a spokesperson said “are not new and we have strongly denied these accusations for well over a decade.”