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Progress Rail suing Wabtec over anticompetitive conduct

14 September 2023
Reading time ~ 3 min
Diesel locomotives at Wabtec’s plant in Erie, USA
Diesel locomotives at Wabtec’s plant in Erie, USA. Source: Greg Wohlford/Erie Times
Belov Sergey, Editor-in-Chief, ROLLINGSTOCK Agency
Reading time ~ 3 min
Savenkova Ekaterina, Editorial Contributor to International Projects of ROLLINGSTOCK Agency

US: A lawsuit of a major U.S. locomotive builder against another was filed in U.S. federal court in Delaware last week. Progress Rail, a division of Caterpillar, accuses Wabtec of abusing its market position for mainline locomotives, control systems, and services.

In its lawsuit, Progress Rail urges to force Wabtec to divest assets it acquired from General Electric in 2019 for $11 bln. Then the defendant took over locomotive plants in Erie (see our post in LinkedIn about the worker strike here), Fort Worth, and a diesel engine plant in Grove City. Progress Rail seeks triple damages, but no amount is specified in the lawsuit.

The plaintiff’s accusations are focused mainly on the segments of modern Tier IV diesel locomotives and onboard control systems. Progress Rail notes that over 10 years Wabtec sold 71% of all locomotives in North America and 90% of Tier IV mainline locomotives in the U.S. market. According to Railway Age, a total of 1,200 Tier IV mainline locomotives have been built since 2015. In the segments of control systems such as PTC safety devices, Trip Optimizer cruise control, Locotrol remote control for locomotives, etc., Wabtec holds about 79–100% of the market.

Progress Rail alleges that Wabtec is in breach of the terms of licence agreements they both entered into in 2019–2020. Those agreements suggested not limiting access to technologies for rolling stock control. According to the plaintiff, the defendant uses its dominant position to reduce cross-product compatibility, limit access to data, create additional financial and time expenses for competitors, and make false statements about competitors’ status.

As an example of the false statements, the lawsuit cites a speech by Wabtec Executive Vice President and Chief Financial Officer John Olin at the Goldman Sachs Industrials Conference, 9 May 2023. He publicly stated Progress Rail wanted to exit the U.S. Tier IV locomotive market which makes Wabtec a monopoly. Although Olin did not refer to Progress Rail in the cited quotes, the plaintiff believes these judgements by the Wabtec representative undermined its relations with customers.

In response to the lawsuit, Wabtec’s spokesperson said Progress Rail’s accusation is “an unsupported attack on the merger of Wabtec and GE Transportation, which was completed more than four years ago” as Progress Rail actively participated in reviewing the transaction. Wabtec intends to “aggressively defend the case in court”.