THE STRANGE CAREER OF INDEPENDENT VOTING TRUSTS IN U.S. RAIL MERGERS

Russell Pittman

Journal of Competition Law and Economics, 2017, vol. 13, issue 1, 89-102

Abstract: Voting trust arrangements have a long history at both the Interstate Commerce Commission (ICC) and the Surface Transportation Board (STB) as devices to protect the incentives of acquiring firms and maintain the independence of acquiring and target firms during the pendency of regulatory investigation of the merger proposal. However, they are not without problems. The STB argued in 2001 that as Class I railroads have become fewer and larger, it may be difficult to find alternative purchasers for the firm whose shares are in the trust if the STB turns down the proposal. The Antitrust Division argued in 2016 that joint stock ownership creates anticompetitive and/or otherwise undesirable incentives, even if the independence of the voting trustee is complete. On the other hand, the functions served by voting trusts in railroad mergers are served by simple lockup agreements in other parts of the economy, without the same incentive problems as voting trusts. Thus voting trusts may no longer serve a useful function in railroad merger deliberations.

JEL-codes: D82 G34 K23 L92 N72 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/joclec/nhx002 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Strange Career of Independent Voting Trusts in U.S. Rail Mergers (2016)
Working Paper: The Strange Career of Independent Voting Trusts in U.S. Rail Mergers (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:13:y:2017:i:1:p:89-102.

Access Statistics for this article

Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

More articles in Journal of Competition Law and Economics from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().