CP-NS: Advocacy is protected speech

January 21, 2016

CP-NS: Government advocacy is protected speech

Written by  Frank N. Wilner, Contributing Editor, Railway Age Magazine

News item: Canadian Pacific (CP) is pursuing a hostile takeover of Norfolk Southern (NS). CP is asking the U.S. Justice Department to investigate whether NS and other U.S.-based major railroads—some of which oppose the takeover—are unlawfully conspiring for “the primary purpose of restraining trade.” CP says “fear of competition does not justify the collective action of competitors.” Yet the Supreme Court long ago ruled that “joint efforts to influence public officials, such as railroad regulators, do not violate the antitrust laws even though intended to eliminate competition.”Website Insert Our Name Tells Our Story copy

Let us begin by returning to 1954, when Marilyn Monroe was wed to the Great DiMaggio; Al Perlman became president of New York Central Railroad; and railroads, even then, were strategizing against longer and heavier trucks poaching railroad traffic. Yep, special interest lobbying, arguably out of fear of competition, with railroads successfully defending their actions as permissible governmental advocacy.

It was 62 years ago when a then-subsidiary-assemblage of the Association of American Railroads, the Eastern Railroads’ Presidents’ Conference, hired the New York public relations firm of Carl Byoir and Associates to design and execute a grass-roots advertising and lobbying campaign to convince lawmakers to increase user charges imposed on heavy trucks so as to better match cost responsibility with pavement damage.

In response, the Pennsylvania Motor Truck Association and 37 Pennsylvania truckers filed suit in federal court against the Byoir agency, the Eastern Railroad Presidents’ Conference and 31 railroads, alleging a conspiracy in restraint of trade. Among the allegations was that the railroads had persuaded the governor of Pennsylvania to veto a bill that would have increased maximum weight limits for trucks using Pennsylvania highways.

In a scathing 200-page opinion, a federal district court found the defendant Byoir agency and railroads guilty of conspiring to “injure the truckers in their competitive position in the long-haul freight industry in the Northeastern United States.” The court rejected the defendants’ contention that the activities were directed solely to obtain legislation and, hence, were within free speech guarantees.

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