Kansas City Southern Statement Regarding Mexican Economic Competition Commission Preliminary Report on Effective Competition ...
March 16 2017 - 09:36AM
Business Wire
Kansas City Southern (KCS) (NYSE: KSU) announced today that
yesterday the Mexican Economic Competition Commission (Commission)
published in the Mexican Official Gazette of the Federation an
abstract of its preliminary report (Preliminary Report) on
effective competition in the market for interconnection services,
trackage and switching rights used to provide railway freight
public services in the rail freight industry in Mexico (Relevant
Market).
In the abstract of its Preliminary Report, the Commission
concludes that conditions of effective competition are lacking in
the market of trackage rights in the rail networks operated by
Kansas City Southern de Mexico, S.A. de C.V. (KCSM), Ferrocarril
Mexicano, S.A. de C.V., Ferrosur, S.A. de C.V. and Ferrocarril and
Terminal del Valle de México, S.A. de C.V., an entity partially
owned by KCSM.
KCSM respectfully disagrees with the Commission’s reasoning and
preliminary conclusions, and will exercise its rights within the
next 20 business days to file evidence and arguments to support its
position, as provided in the Mexican Federal Economic Competition
Statute. After the end of the aforementioned 20 business-day
period, the Commission has an additional term of up to 110 business
days to issue a final report in connection with effective
competition conditions in the Relevant Market.
No remedy, sanction, penalty or other alteration of the rights
of KCSM is imposed by the Preliminary Report. Any such action could
only be considered subsequent to the issuance of a final report by
the Commission and then only separately by the Regulatory Agency of
Railway Transportation (Railway Regulatory Agency or Agency) at the
SCT.
As such, the preliminary conclusions have no impact on KCSM’s
current business and operations.
In the event that in its final report the Commission confirms
its preliminary conclusions, the Railway Regulatory Agency of the
SCT would have authority to consider specific remedies, which could
include, among others, imposition of limited mandatory trackage
rights on KCSM and other concessionaries, for specific commodities,
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 limited mandatory trackage rights. Before any such
action, however, the Agency must first evaluate the evidence and
arguments offered by the applicable concessionaires.
Should the Commission’s final report affirm the preliminary
conclusions 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.
Headquartered in Kansas City, Mo., KCS is a transportation
holding company that has railroad investments in the U.S., Mexico
and Panama. Its primary U.S. holding is The Kansas City Southern
Railway Company, serving the central and south central U.S. Its
international holdings include Kansas City Southern de Mexico, S.A.
de C.V., serving northeastern and central Mexico and the port
cities of Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent
interest in Panama Canal Railway Company, providing ocean-to-ocean
freight and passenger service along the Panama Canal. KCS' North
American rail holdings and strategic alliances are primary
components of a NAFTA Railway system, linking the commercial and
industrial centers of the U.S., Mexico and Canada.
This news release contains “forward-looking statements” within
the meaning of the securities laws concerning potential future
events involving KCS and its subsidiaries, which could materially
differ from the events that actually occur. Words such as
“projects,” “estimates,” “forecasts,” “believes,” “intends,”
“expects,” “anticipates,” and similar expressions are intended to
identify many of these forward-looking statements. Such
forward-looking statements are based upon information currently
available to management and management’s perception thereof as of
the date hereof. Differences that actually occur could be caused by
a number of external factors over which management has little or no
control, including: competition and consolidation within the
transportation industry; the business environment in industries
that produce and use items shipped by rail; loss of the rail
concession of KCS’ subsidiary, Kansas City Southern de México, S.A.
de C.V.; the termination of, or failure to renew, agreements with
customers, other railroads and third parties; access to capital;
disruptions to KCS’ technology infrastructure, including its
computer systems; natural events such as severe weather, hurricanes
and floods; market and regulatory responses to climate change;
legislative and regulatory developments and disputes; rail
accidents or other incidents or accidents on KCS’ rail network or
at KCS’ facilities or customer facilities involving the release of
hazardous materials, including toxic inhalation hazards;
fluctuation in prices or availability of key materials, in
particular diesel fuel; dependency on certain key suppliers of core
rail equipment; changes in securities and capital markets;
availability of qualified personnel; labor difficulties, including
strikes and work stoppages; insufficiency of insurance to cover
lost revenue, profits or other damages; acts of terrorism or risk
of terrorist activities; war or risk of war; domestic and
international economic, political and social conditions; the level
of trade between the United
States and Asia or Mexico; fluctuations in the
peso-dollar exchange rate; increased demand and traffic congestion;
the outcome of claims and litigation involving KCS or its
subsidiaries; and other factors affecting the operation of the
business. More detailed information about factors that could affect
future events may be found in filings by KCS with the Securities
and Exchange Commission, including KCS’ Annual Report on Form 10-K
for the year ended December 31, 2016 (File No. 1-4717) and
subsequent reports. Forward-looking statements are not, and should
not be relied upon as, a guarantee of future performance or
results, nor will they necessarily prove to be accurate indications
of the times at or by which any such performance or results will be
achieved. As a result, actual outcomes and results may differ
materially from those expressed in forward-looking statements. KCS
is not obligated to update any forward-looking statements to
reflect future events or developments.
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version on businesswire.com: http://www.businesswire.com/news/home/20170316005766/en/
Kansas City SouthernMexico:Rogelio Hernandez Vega,
011-52-55-91-78-56-51jhernandezvega@kcsms.com.mxorU.S.:C.
Doniele Carlson, 816-983-1372dcarlson@kcsouthern.com
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