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Two railroads accused in lawsuit of price fixing

WASHINGTON (Reuters) - Privately held shipping company Oxbow Group sued two major U.S. railroads on Tuesday, accusing them of price gouging and adding heft to legal and political challenges of freight company business practices.

Filed in the U.S. District Court for the District of Columbia, the lawsuit asserts that Union Pacific Railroad Co and Burlington Northern Santa Fe Railway (BNSF) used monopolization and price fixing to illegally increase costs of shipping coal and other products.

BNSF said in a statement that it had "not colluded or conspired in violation of any law" and that it would respond to the lawsuit through the legal process after reviewing it.

A Union Pacific spokesman said the company had not seen the complaint and had no comment.

Oxbow, headed by billionaire Bill Koch, ships mined coal and petroleum coke.

The lawsuit accused the railroads having colluded on fuel surcharges since 2003 with two other major freight railroads, CSX Transportation and Norfolk Southern Railway Co. Neither CSX nor Norfolk Southern could be reached for comment.

A number of cases centered on claims of excessive railroad fuel surcharges are awaiting a decision on whether they should have class status in the same federal court.

"This is very serious litigation," said Bob Szabo, who leads a coalition of utilities, paper and chemical companies, and other industries that have gone to Congress to challenge railroad practices.

"I think that my initial reaction would be that it reinforces the complaint that we're making," Szabo said.

Proposed Senate legislation would strip railroads of their antitrust exemption and overhaul the way they are regulated.

In the past, similar proposals in Congress have failed to become law.

Regulators at the U.S. Surface Transportation Board are also weighing complaints about freight rail pricing. A hearing on that issue is scheduled for June 22.

The case is Oxbow Carbon & Minerals LLC vs Union Pacific Railroad Co and BNSF Railway Co, U.S. District Court for the District of Columbia, No. 1:11-cv-01049.

(Reporting by John Crawley)

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