Antitrust Experts Warn Regulators to Be Wary of Rival Railroad Claims
● Competitor opposition signals the merger will create stronger competition. Four former senior federal antitrust officials say regulators should consider whether rival railroads are objecting because a coast-to-coast network competes more aggressively for customers.
● The Union Pacific–Norfolk Southern combination will make freight rail more efficient and competitive. By connecting complementary eastern and western networks, the merger will reduce costly interchanges and provide shippers with seamless single-line service.
● The experts argue for focusing on shippers and consumers rather than on competing railroads, distinguishing between genuine competitive harm and complaints from rival railroads concerned about losing traffic to a stronger transcontinental network.
Key Takeaways:
- A seamless transcontinental network expands freight options. The combination would create America’s first single-line coast-to-coast railroad with new lanes, faster routing and broader market access.
- Single-line service reduces supply chain friction. Fewer handoffs and more direct routing are designed to improve speed, reliability and efficiency for long-distance freight movement.
- The proposed combination strengthens American competitiveness.The applicationhighlights supply chain growth, new union jobs, and expanded rail capacity as long-term economic benefits.
Creating America’s first transcontinental railroad will have enhanced competition well beyond any previous rail merger, the CEOs of Union Pacific and Norfolk Southern told industry leaders Tuesday.
Union Pacific CEO Jim Vena and Norfolk Southern President and CEO Mark George made the comments in a joint interview with Trains Magazine editor Bill Stephens at the Future of Rail Symposium hosted July 28 by FreightWaves and Trains Magazine. The session is available to watch here.
The discussion took place at a time when momentum for the merger is building. The Surface Transportation Board (STB) accepted the merger application as complete; CN withdrew its opposition; and the railroads demonstrated their confidence by making four new voluntary commitments to support rail competition and protect customers.
Vena and George said they listened to feedback from customers and the STB. They realized there was an opportunity to show confidence in the merger and provide even more assurances the combination is pro-competitive and backed by a comprehensive plan for a smooth transition.
The railroads doubled the scope of Committed Gateway Pricing (CGP); ensured 2-to-1 and 3-to-2 shipper facilities will have access to an additional Class I railroad; created a mechanism to give customers alternative rail access in the unlikely event that service performance declines during merger integration; and proposed a new enforcement tool for the STB if expected merger benefits are not delivered in a timely manner.
“CGP opens it up and lets us go and compete,” Vena said. “It’ll put everybody’s feet to the fire more to compete even harder, and that’s what it’s all about. We’re willing to compete.”
“We’ve gone beyond what any Class I merger in the past has done in terms of offering new competition,” George said. “When you couple that with what we did through our agreement with CN, we’re changing the competitive landscape for the better.”
The agreement with CN, including expanded use of the Elgin, Joliet & Eastern Railway, would not have happened without the prospect of the merger, Vena said. “I wouldn’t have gotten through the turnstiles. They would’ve kicked me out of the building.”
Beyond increasing railroad competition, the CEOs emphasized the direct benefits for customers. A combined Union Pacific and Norfolk Southern would create 88,000 new single-line lanes, eliminating many of the handoffs that today occur between eastern and western railroads. George said customers consistently tell him they want one railroad responsible for their shipment from origin to destination, with one service plan, one operating philosophy and one point of accountability.
“What we’re doing with the merger is truly transforming, creating 88,000 new single-line lanes,” George said. “We know when single-line service is offered, shippers are 2-3 times more likely to select rail versus truck. We are creating an enormous public benefit when we come together by offering all these new single-line options.”
George said those benefits translate into meaningful opportunities for growth, particularly across the Mississippi River watershed, where many customers today rely on trucks or complex interline rail moves to reach new markets. He noted that every eliminated interchange removes risk, reduces variability and improves reliability – factors that directly influence purchasing decisions. Examples include finished vehicle shipments from Georgetown, Indiana, to Mira Loma, California, which could move more than 48 hours faster; chemical traffic moving from Old Fort, Ohio, to Green River, Wyoming, with approximately 24 hours of transit improvement; and paper and consumer products shipments from Jackson, Alabama, to Salem, Oregon, with roughly 48 hours savings. Both CEOs consistently acknowledged that customers don't buy handoffs, they buy speed, consistency, and accountability.
For Vena, the bottom line is simple: customers benefit when railroads compete harder for their business.
“At the end of the day, the end user of the product would say, let them go compete,” he said. "[The other railroads] can drop their price. They can provide a higher level of service to compete against us. They are very strong. We’re going to protect railroads that want to be inefficient? I don’t think so.”
Four former federal antitrust officials are urging the Surface Transportation Board (STB) to carefully consider the motivations behind competitor opposition to the proposed Union Pacific–Norfolk Southern merger, according to a new report from The Center Square.
In comments submitted to the STB, former federal antitrust officials Alden F. Abbott, Abbott “Tad” B. Lipsky Jr., Gregory J. Werden and Mark Whitener offered an antitrust perspective on how regulators should evaluate arguments from competing railroads. All four previously held senior posts at the Federal Trade Commission or U.S. Department of Justice Antitrust Division.
The officials, who said they were submitting their comments independently and not on behalf of either railroad, stopped short of taking a position on whether the merger should be approved. Instead, they focused on a fundamental question for regulators: Does opposition from a competitor demonstrate that a transaction will reduce competition — or could it indicate that the competitor expects to face more of it?
The experts noted that when a merger truly reduces competition, competitors can benefit from the resulting weaker marketplace, allowing companies to raise prices, reduce output or degrade service. By contrast, a rival may have a strong incentive to oppose a merger that makes another company more efficient, lowers its costs or allows it to compete more aggressively for customers.
That distinction is particularly relevant to the proposed Union Pacific–Norfolk Southern combination. Rather than joining two overlapping networks, the merger connects Union Pacific’s western system with Norfolk Southern’s eastern network to create the nation’s first single-line transcontinental railroad.
That end-to-end structure has the potential to change how freight moves across the country. Today, many shipments traveling between the eastern and western United States must be transferred between railroads at major interchange points such as Chicago, St. Louis, Memphis and New Orleans. A single-line network will eliminate many of those handoffs, reducing complexity and creating opportunities for faster, more reliable service.
The former antitrust officials also pointed to the economic efficiencies that can result from eliminating interline transfers, including lower costs associated with moving freight across multiple railroads.
The Center Square article poses that the key question for regulators is whether the transaction harms the customers who depend on freight transportation — not whether another railroad expects to lose business.
That framework offers important context for opposition from competitors including BNSF Railway and Canadian Pacific Kansas City. Opponents have argued that the merger would reduce rail competition and increase costs. But Union Pacific and Norfolk Southern have maintained that connecting their complementary networks will do the opposite: provide customers with more efficient single-line service and make rail more competitive with trucking.
The railroads have also added commitments designed to protect customers and demonstrate the merger’s public benefits, which were included in supplemental information filed with the STB in July.
The merger’s potential benefits extend beyond competition among railroads. Union Pacific and Norfolk Southern estimate the combined network will shift 2.1 million truckloads from highways to rail each year and generate approximately $3.5 billion in annual shipper savings.
As the STB continues its review, the former officials’ comments add another dimension to the competition debate: opposition from a rival is not necessarily evidence that a merger will weaken the marketplace. Instead, it may signal that competitors expect a stronger new rival — and more competition for customers.
Read the full Center Square article here.