Railroad Antitrust Immunity: Clarification, Discussion, and Evaluation

Abstract

The U.S. Congress regulated the railroad industry in 1887, and over the course of the 20th century also granted the industry significant antitrust immunities. Antitrust immunities are laws that expressly exempt an industry from prosecution under antitrust laws, such as the Sherman Act. Presumably, the rationale for railroad antitrust immunities was that because railroads were stringently regulated, the regulators alone would uphold antitrust principles and make antitrust litigation unnecessary. However, culminating in the passage of the Staggers Rail Act of 1980, the railroad industry was largely deregulated, yet retained many antitrust immunities. This has raised concerns among shippers and consumers that railroad companies, which often face neither regulation nor antitrust liability, can freely commit anticompetitive abuses. Given these concerns and currently proposed legislation to abolish railroad antitrust immunities, the purpose of this paper is to evaluate the efficacy of legal outcomes in a counterfactual situation where antitrust immunities are abolished. To reach this end, I will first clarify railroad regulation and deregulation, antitrust laws as they apply to all other industries, and the poorly understood railroad antitrust immunities.