Progress Rail sues Wabtec

Caterpillar’s rail division has sued rival Wabtec in federal court, alleging it abused its power in the market for diesel long-haul locomotives.

Progress Rail wants the federal judge to force Pittsburgh-based Wabtec to divest the GE Transportation Unit it bought in 2019 in an $11 billion deal.

According to the suit by Progress Rail, the freight rail industry is integral to the U.S. supply chain and the functioning of the U.S. economy more broadly.

“Freight locomotives provide the muscle necessary to transport the essential goods and resources millions of Americans rely on every day. Robust competition to develop, manufacture, and sell freight locomotives and complimentary cab components is therefore essential to ensure the freight rail transportation industry and the consumers who rely on its services receive the best products at competitive prices,” the suit states.

But Progress Rail argues that in 2019, the competitive balance critical to the freight locomotive industry was disrupted when Wabtec acquired General Electric Co. Transportation.

“That combination merged the sole supplier of certain key freight locomotive inputs (Wabtec) with the dominant supplier of finished freight locomotives and other cab technologies (GE Transportation),” the lawsuit alleges. “It created a vertically integrated entity with dominant positions in multiple products and the incentive and ability to engage in anticompetitive exclusionary conduct to harm the competitive process and consumers.”

Progress Rail said Wabtec is one of the only or leading manufacturers of a long list of equipment used in the U.S. freight rail network. It is the dominant supplier of freight locomotives, having manufactured and sold approximately 75 percent of active diesel long-haul freight locomotives in North America, and approximately 90 percent of new long-haul freight locomotives that comply with Tier IV rail industry standards and the Environmental Protection Agency’s (EPA) most recent emissions regulations.

Wabtec released a statement denying Progress Rail’s claims:

“We believe that Progress Rail’s recent complaint against Wabtec at its core is an unsupported attack on the merger of Wabtec and GE Transportation, which was completed over four years ago. The merger has provided benefits to the entire industry, as well as Progress Rail itself.

Progress Rail actively participated in the U.S. Government’s review of that transaction and benefitted by entering into agreements with Wabtec that transferred Wabtec technology to it as part of the United States Department of Justice and global merger clearance process.

We also firmly believe that Progress Rail’s assertions that Wabtec breached agreements or engaged in other illegal conduct are wrong. We intend to aggressively defend the case in court.”