Kansas City Southern Statement Regarding Mexican Economic Competition Commission Preliminary Report Issued on March 21st, 2019
March 25 2019 - 8:00AM
Business Wire
Kansas City Southern (KCS) (NYSE:KSU) confirmed that on
Thursday, March 21st, 2019 the Investigation Authority
(Investigation Authority) of the Mexican Federal Competition
Commission (COFECE) published an extract of its preliminary report
(Preliminary Report) regarding its assessment of effective
competition in the market of freight railway transportation
services regarding certain chemical and petrochemical products
(Relevant Product) shipped in certain specific routes with an
origin or destination in the southern region of the State of
Veracruz (Market).
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 (KCSM) is only involved in rendering freight
transportation services in limited portions of 7 (seven) routes.
During 2018, KCS’ revenue associated with these routes represented
less than $3 million 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 (narrowed by product) 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.
Headquartered in Kansas City, Mo., Kansas City Southern (KCS)
(NYSE: KSU) 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 with other North American rail partners are
primary components of a unique railway system, linking the
commercial and industrial centers of the U.S., Mexico and Canada.
More information about KCS can be found at www.kcsouthern.com.
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;
unavailability of qualified personnel; labor difficulties,
including strikes and work stoppages; 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, 2017 (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. All reconciliations to GAAP
can be found on the KCS website, kcsouthern.com/investors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190325005166/en/
KCS: Ashley Thorne, 816-983-1530,
athorne@kcsouthern.com
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