Kansas City Southern says preliminary report has 'no impact' on current business
Kansas City Southern confirmed that the Investigation Authority of the Mexican Federal Competition Commission published an extract of its preliminary report regarding its assessment of effective competition in the market of freight railway transportation services regarding certain chemical and petrochemical products shipped in certain specific routes with an origin or destination in the southern region of the State of Veracruz. The company said, "The scope of the Preliminary Report is limited to 31 routes with specific points of origin and destination in the Market and each route is tied to a specific Relevant Product. Kansas City Southern de Mexico is only involved in rendering freight transportation services in limited portions of 7 routes. During 2018, KCS' revenue associated with these routes represented less than $3M of revenue. The issuance of the Preliminary Report has no impact on KCSM's current business, operations, or rights under the concession. KCSM will file a brief challenging the Preliminary Report and offering evidentiary support for its challenge. The Panel of the Commission must issue a final report by mid-October taking into account the Preliminary Report, as well as the arguments, challenges and evidence rendered by KCSM and other parties within the scope of that report. If the Panel of COFECE confirms a lack of effective competition in any of the routes included in the Preliminary Report, then the Railway Regulatory Agency would initiate the specific procedure arising from the railway regulatory law that could include, among others, imposition of remedies in the form of mandatory trackage rights on KCSM and other concessionaries, for specific products, routes or segments thereof, in addition to the mandatory trackage rights already provided in their corresponding concession titles. The Agency may also impose the service conditions and rates for these mandatory trackage rights. However, before any such action, the Agency must first evaluate the evidence and arguments offered by the applicable concessionaires. In this case, a hearing with the Railway Regulatory Agency would be held with the corresponding concessionaries, and the concessionaries can offer their own remedies if they wish. Should the final report issued by the Panel of COFECE affirm the Preliminary Report and the Railway Regulatory Agency consider specific remedies for such findings, KCSM will exercise all of its rights under its concession and the law to ensure that any actions considered by the Agency are workable and consistent with KCSM's rights under law and under its concession."