Former antitrust officials urge close look at rail merger rivals

The comments were signed by Alden F. Abbott, Abbott B. “Tad” Lipsky Jr., Gregory J. Werden and Mark Whitener. All four previously held senior posts at the Federal Trade Commission or U.S. Department of Justice Antitrust Division.

They said they were filing on their own behalf, not for either railroad or any other party in the case.

The former officials did not ask the board to approve the merger. They also said they were not trying to prove or disprove the railroads’ claims.

Instead, they said the board should be careful about giving too much weight to complaints from rival railroads, because those companies could have their own financial reasons for opposing the deal.

“If a merger between competing firms is likely to have anticompetitive effects — for example, it results in higher prices, reduced output, or degradation of service — the competitors in a market would generally benefit from the resulting reduction in competition,” they wrote. “In this scenario, rivals would not have a rational economic basis to complain about the transaction.”

The former officials said the opposite may also be true. If competitors are fighting a merger, they said, regulators should ask if those competitors are worried about losing business to a stronger company.

“Ultimately, a competitor’s opposition should serve as a signal to the Board not of harm, but of potential efficiency gains that will intensify market rivalry,” they wrote.

Union Pacific and Norfolk Southern have argued their merger would make freight service faster and more efficient by creating a single coast-to-coast railroad. Union Pacific mainly operates in the western U.S., while Norfolk Southern mainly operates in the East.

The Surface Transportation Board has said the two rail systems overlap only in Missouri and Illinois. Together, they would operate about 50,000 miles of track in 43 states.

That matters, the former antitrust officials wrote, since the merger is not mainly a deal between two railroads that already compete head-to-head across the same territory. They said it is more like a deal that joins two rail networks end to end.

Today, freight often has to be handed off from one railroad to another in places like Chicago, St. Louis, Memphis and New Orleans. The former officials said reducing those handoffs could lower costs and improve service for shippers.

“When single-line integration eliminates interline handoffs, it can also eliminate double markups ... or otherwise reduce costs and improve efficiency,” they wrote.

They also said competitor concerns should be judged by whether they show harm to shippers and consumers, not just harm to rival railroads.

“No matter how much data a competitor stacks up, data showing that a rival expects to lose traffic to a newly integrated single-line network merely quantifies competitor harm,” they wrote.

Opponents have argued the merger would give Union Pacific and Norfolk Southern too much power in the freight rail market.

As The Center Square previously reported, BNSF Railway and Canadian Pacific Kansas City are part of a coalition opposing the merger. BNSF competes with Union Pacific in the western U.S.

BNSF CEO Katie Farmer said in April the deal “will eliminate competition, raise costs for consumers, and destabilize the supply chain that powers the American economy.”

Union Pacific and Norfolk Southern have rejected that argument.

After filing more information with regulators in July, Union Pacific CEO Jim Vena said the merger “enhances competition and delivers real public benefits that make America’s supply chain stronger.”

Norfolk Southern CEO Mark George has said shippers want single-line rail service, with one railroad responsible for freight from start to finish.

The Surface Transportation Board accepted the railroads’ revised merger application for consideration May 28 after rejecting an earlier filing as incomplete in January. The board also asked the companies for more information before the full review could proceed.

Union Pacific and Norfolk Southern filed that additional information July 27. The companies said the filing included new customer protections and other commitments.

The companies say the merger would shift about 2.1 million truckloads a year from highways to rail and save shippers about $3.5 billion a year.

The Surface Transportation Board will likely continue reviewing the merger into next year. The companies have said they expect the deal to close in mid-2027 if regulators approve it.