WASHINGTON -- U.S. Senator Herb Kohl today introduced the Railroad Antitrust Enforcement Act of 2006 in response to concerns that freight railroads are abusing their dominant market power and raising rates for those who rely on them to ship dozens of vital commodities, including coal and agricultural products. The legislation will repeal the obsolete antitrust exemptions protecting freight railroads from competition. These exemptions deny rail consumers antitrust protections available to consumers in virtually every other industry. Last year, according to the Wisconsin Public Service Commission, Wisconsin utilities incurred nearly $50 million in additional costs associated with shipments of coal, which provides about 60 percent of the state's energy. These costs are then passed along consumers already paying for record high energy prices.

"By clearing out this thicket of outmoded antitrust exemptions, railroads will be subject to the same laws as the rest of the economy," Kohl said. "All those who rely on railroads to ship their products -- whether it is an electric utility for its coal, a farmer to ship his grain, or a factory to acquire its raw materials or ship out its finished product -- deserve the full application of the antitrust laws to end the anti-competitive abuses all too prevalent in this industry today."

Over the last 20 years, railroad industry consolidation has reached the point where only four class I railroads provide over 90 percent of the nation's rail transportation. Many industries -- known as "captive shippers" -- are served by only one railroad. These captive shippers have faced constantly rising rail rates. Captive shippers allege they have been the victim of monopolistic practices and price gouging by the single railroad that serves them, price increases which they are forced to pass along into the price of their products and, ultimately, to consumers. And in many cases the ordinary protections of antitrust law are unavailable to these captive shippers -- instead, the railroads are protected by a series of exemptions from the normal rules of antitrust law to which all other industries must abide.

Dairyland Power in La Crosse serves the electricity needs of more than 575,000 people. In recent years, they have experienced a 93 percent average increase in rail rages as of January of this year. According to Dairyland, it will now cost about $75 million to ship $30 million worth of coal.

Current antitrust law protects a wide range of railroad industry conduct from scrutiny by antitrust enforcers. Railroad mergers and acquisitions are exempt from antitrust law and are reviewed solely by the Surface Transportation Board. Railroads that engage in collective ratemaking are also exempt from antitrust law. Kohl's bill will eliminate these antitrust exemptions by allowing the federal government, state attorneys general and private parties to file suit to enjoin anti-competitive mergers and acquisitions. It will restore the review of these mergers to the agencies where they belong -- the Justice Department's Antitrust Division and the Federal Trade Commission. And it will eliminate the antitrust exemption for railroad collective rate making.

Kohl is the senior Democrat of the Senate Judiciary Committee's Antitrust, Competition Policy and Consumer Rights panel.

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