Table of Contents - Norfolk Southern Railway

1 Table of ContentsAntitrust Policy of Norfolk Southern and Its Participating Subsidiary Companies ..1 Rules of Conduct for Avoiding Antitrust Violations and Danger Areas Requiring Legal Assistance ..2 Relationships with Competitors ..3 Rules of Conduct: Agreements on Price and Related Matters ..3 Dividing or Allocating Business ..4 Agreements Restricting Business with Other Firms ..4 Other Antitrust Danger Areas: ..5 What are the basic antitrust guidelines for participating in a trade association? ..5 What should I do if a participant from another company raises a prohibited topic? ..6 Information Exchange ..7 Joint Purchasing and Joint Research ..7 Dealings with Customers and Suppliers ..7 Rules of Conduct: Tying Arrangements ..8 Reciprocal Arrangements ..8 Agreements Restricting Business with Other Firms ..8 Other Antitrust Danger Areas: Rail Service in Transportation Services ..9 Discrimination in Sales of Goods ..9 Restrictions on Resale of Goods ..9 Monopoly Situations.

2 10 Rules of Conduct:..10 Other Antitrust Danger Areas: Bottlenecks ..11 Additional Precautions ..12 Correspondence and Communications ..12 Rules of Conduct:..12 Antitrust Investigations ..13 Use the Law Department ..131 Norfolk Southern Corporation Antitrust Compliance GuideAntitrust Policy of Norfolk Southern Corporation And Its Participating Subsidiary CompaniesIt is the policy of Norfolk Southern Corporation and its participating subsidiary companies (NS) to comply fully with all federal and state antitrust laws. No NS officer or employee is permitted or authorized to take any action inconsistent with the antitrust laws or to permit or order others to take such an action. Any officer or employee who does so will be subject to strict disciplinary action. Belief that unlawful conduct is in NS interest is never correct; such a belief will not protect NS from antitrust liability and will not prevent disciplinary action against an officer or antitrust laws include several federal statutes designed to protect vigorous and unrestricted business competition.

3 Most states have also adopted antitrust laws that govern local activities not covered by the federal laws. These state laws generally are similar to the federal antitrust laws. Penalties for violation of these laws may be severe. Certain prohibited activities may be punished as crimes; the individuals involved may be sent to prison, and individuals as well as companies may be required to pay significant fines. In addition, companies or persons harmed by antitrust law violations may sue to recover for injuries they have suffered, and their compensation will often be tripled to discourage violation of these important laws. Even in cases where no violation is found, defending antitrust lawsuits is expensive, disruptive, and time antitrust laws are complex and their applicability to particular facts is often difficult to determine. Final responsibility for assuring compliance with the antitrust laws therefore rests in the Norfolk Southern Law Department. Nevertheless, NS policy of complying with the antitrust laws can be successful only if NS personnel are aware of the principal types of conduct prohibited by the antitrust laws and are able to recognize dangerous circumstances that require legal assistance.

4 Keep in mind that actions based on sound business judgment and taken with the best of intentions may still result in antitrust violations. That is why this Guide should be reviewed carefully. If each of us avoids clearly unlawful conduct and seeks legal advice when questions arise, the people of NS will fulfill their legal obligations and will be protected from the consequences of antitrust of Conduct for Avoiding Antitrust Violations and Danger Areas Requiring Legal AssistanceThe antitrust rules for any business generally are complex, but application of the antitrust laws to the railroad industry poses especially difficult problems. The antitrust laws usually require competitors to act independently, but in railroading that is not always possible. Railroads that compete in one corridor frequently cooperate to provide services demanded by the shipping public in another corridor, such as services involving joint routes or joint-line rates. At the same time, rail deregulation has lessened some of the special protections, or exemptions, from the antitrust laws that were previously thought to exist.

5 As a result, antitrust restrictions on railroading are only now being explored in the such uncertainties, it is not possible to distill all of the antitrust laws into a few comprehensive and easily understood rules. However, this Antitrust Compliance Guide simplifies these legal complexities by identifying general policies that are designed to minimize the risk of an antitrust violation. These broad policy guidelines may proscribe conduct that, under certain circumstances, is permissible under the antitrust laws. Company policy nevertheless forbids such conduct unless it is reviewed and approved in advance by the Law Department. The Guide lists a number of rules of conduct -- designated with a -- that, if carefully obeyed, will prevent the most serious types of antitrust violations. In addition, the Guide discusses other antitrust danger areas where the rules are not clear and legal advice must be freely of conduct and discussions of danger areas are provided for three situations in which antitrust problems are most likely to arise in the course of day-to-day railroad activities: Relationships with competitors.

6 Dealings with customers and suppliers. Monopoly it is unclear whether these rules of conduct or warnings of danger areas apply to particular conduct, do not guess. Immediately contact the Law Department instead. If the instructions in this Guide are studied and applied with care and common sense and if counsel is contacted when 3 Norfolk Southern Corporation Antitrust Compliance Guidequestions arise, serious antitrust problems can be avoided. Despite the long list of prohibitions and cautions that follow, sound business decisions generally can be implemented in full compliance with the antitrust WITH COMPETITORSNo type of activity is more likely to run afoul of the antitrust laws than agreements among competitors that reduce competition. Such agreements include most of the antitrust violations that are particularly likely to result in criminal prosecution. Unlawful agreements include not only formal written contracts but also oral understandings and even patterns of similar behavior by separate firms that imply an arrangement among competitors.

7 Caution is therefore required in all contacts with other railroads, truckers or barge operators, as well as with suppliers of goods and equipment that are also supplied by NS. Caution is especially necessary if there is any possibility that the types of problems described below may of Conduct:Agreements on Price and Related Matters NEVER agree with a competitor on prices for competing services. The only exception to this rule is that certain rates may be discussed under limited circumstances in rate bureaus operating with STB approval. The rules governing rate bureau activities are particularly complex; all participation in rate bureaus therefore requires advance consultation with and guidance from the Law Department. NEVER disclose NS single-line rates to a competing transportation firm or discuss with such a competitor either firm s single-line rates. NEVER disclose NS joint-line rates to a competing transportation firm or discuss with such a competitor either firm s joint-line rates, except that joint-line rates in which both firms participate may be discussed and negotiated.

8 Different rules apply in the special situation in which NS participates with another railroad in a joint-line rate but either the other railroad or NS also participates in a competing joint-line rate. Where NS wishes to discuss the competing joint-line rate with the other railroad ( , to assure that NS obtains an equivalent division), consult the Law Department in advance. 4 NEVER disclose NS prices for goods, such as scrap steel, to a competing supplier, or discuss with a competing supplier either firm s prices in sales of such goods. ALL of these rules against disclosure and discussion apply with equal force to disclosures and discussions of methods of cost calculation and of terms and conditions of doing business, other than prices, that may directly or indirectly affect prices. (Terms and conditions include matters such as credit terms, discounts and rebates and equipment supply, and also include charges and fees that may affect prices, such as rental for the use of trailers in TOFC service).

9 Dividing or Allocating Business NEVER agree with a competitor that NS will serve certain customers or territories while the competitor serves others. (For example, two railroads should not agree to schedule TOFC trains in a corridor so that one railroad captures part of the TOFC traffic while the other carries the remainder.) NEVER agree with a competitor not to compete. Railroads may develop applications to the STB for pooling or coordination of service. Consult the Law Department before such projects are discussed with another carrier. Agreements Restricting Business with Other Firms NEVER agree with a competitor not to purchase from a supplier or serve a customer. (For example, an agreement between a railroad and a competing transportation company not to serve a particular manufacturer would be improper.) NEVER agree with a competitor not to cooperate or to restrict cooperation with another competitor. (For example, an agreement between two competing railroads not to interline coal shipments with a barge operator would be improper.)

10 5 Norfolk Southern Corporation Antitrust Compliance GuideOther Antitrust Danger Areas:NS believes employee participation in trade associations is important to our continued success and to the professional development of our employees. Trade associations play an important role in disseminating industry information and administering railroad service. Because trade organization meetings are among the most fertile hunting grounds for antitrust investigators, participants in such gatherings must be especially alert to antitrust problems and discuss any questions or concerns with the Law are the basic antitrust guidelines for participating in a trade association? ALWAYS work from an agenda for all trade association meetings. When leading a meeting, set an agenda in advance, have the agenda approved by the Law Department, and send the approved agenda to other participants of the meeting before the meeting. As a participant in an upcoming meeting, obtain an agenda in advance from the leader and review any questionable topics with the Law Department before the meeting.