OMAHA, Neb. — Canadian National is likely to sweeten its $33.7 billion offer to buy Kansas City Southern railroad to secure the deal over rival Canadian Pacific, according to a report.

The Wall Street Journal reported Thursday, based on anonymous sources, that Canadian National was likely to offer to pay the $700 million breakup fee that Kansas City Southern will owe to Canadian Pacific if it decides to walk away from CP’s initial $25 billion offer.

Canadian National and Kansas City Southern railroads didn’t immediately respond Thursday to questions about the deal.

Kansas City Southern has been reviewing both bids and holding talks with its Canadian suitors since CN joined the bidding last month. Canadian National has maintained that it has the better bid ever since it announced the unsolicited offer about a month after Canadian Pacific and Kansas City Southern announced they had agreed to merge.

So far, Canadian Pacific has declined to increase its offer for Kansas City Southern because CP officials said they believed the Canadian National deal would have trouble getting approved by regulators who are concerned about the impact on competition. Canadian Pacific spokeswoman Serena Saitto said the news about CN’s increased offer doesn’t change its view on the deal.

“This only highlights CN’s recognition of the significant regulatory risk of its anti-competitive bid,” Saitto said.

Canadian Pacific has said combining Kansas City Southern and Canadian National would hurt competition because both those companies have rail lines that compete for business between the Midwest and the Gulf Coast. Canadian Pacific’s network connects to Kansas City Southern near its headquarters in Kansas City, Missouri, but those two railroads don’t overlap elsewhere.

Canadian National has said it doesn’t believe its offer would hurt competition, and it is confident it could address any competitive concerns later in the review process. CN officials said every other major railroad has a north-south route somewhere in the country that could compete for traffic.

If Canadian National and Kansas City Southern do reach a merger agreement, Canadian Pacific will still have a chance to revise its bid in response or walk away with the $700 million breakup fee.

Canadian Pacific’s original offer valued Kansas City Southern at $275 per share. When Canadian National intervened in the deal it offered $325 cash and stock and its offer included more cash per share.

U.S. regulators haven’t approved any major railroad mergers since the 1990s, and officials have said that generally any deal involving one of the six largest railroads must enhance competition and serve the public interest. The Surface Transportation Board has also said it would consider whether any deal would destabilize the industry and prompt additional mergers.