Republican State Attorneys General Urge Federal Review of Union Pacific–Norfolk Southern Merger

In a letter spearheaded by Montana Attorney General Austin Knudsen, the coalition asked Acting Assistant Attorney General Omeed Assefi to conduct an in-depth antitrust review of the $85 billion transaction. The request comes as the Surface Transportation Board, the federal agency with exclusive authority to approve or reject major rail mergers, evaluates the proposal.

According to a statement from the group, the attorneys general believe the east-west consolidation could significantly reduce competition across major freight corridors and ultimately increase shipping costs for businesses and consumers. The Justice Department’s Antitrust Division does not have final approval power over rail mergers but typically provides analysis and formal input to the Surface Transportation Board during its review process.

Union Pacific has indicated it plans to submit an updated merger application to the board by March.

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Per a statement issued by the coalition, a preliminary assessment conducted by the attorneys general concluded that the companies have not sufficiently addressed what they describe as a clear loss of horizontal competition. The group said those unresolved issues raise substantial antitrust concerns.

Read more: Two Major Railroads Reject Consolidation as Union Pacific Pursues $85 Billion Deal

In the letter to federal officials, Knudsen wrote, “By entrenching a single rail behemoth across key east-west corridors, the deal would shackle domestic manufacturers, energy producers, and farmers with higher rates and fewer shipping options, thereby blunting their competitive edge against foreign rivals, squeezing household budgets, and weakening the supply chains that underpin our national security.” He added, “Accordingly, we encourage the Department of Justice Antitrust Division to carefully scrutinize the merger, applying the existing law and merger guidelines to support the Surface Transportation Board’s review of the transaction.”

The coalition further warned that the merger, if approved, would reduce the number of major U.S. Class I railroads from four to three. According to a statement from the attorneys general, the consolidation “could reduce shipping options by limiting cooperation with other railroads for interline services, which raises questions of whether the railroad companies’ commitment to keeping connection points open for freight and railcars is truthful, given it is not enforceable.”

While Union Pacific has maintained that the merger would enhance efficiency and drive growth, the attorneys general urged federal regulators to weigh those claims carefully. Per a statement from the group, they pointed to what they characterized as nearly a decade of declining rail service performance by Union Pacific as a factor that warrants additional scrutiny from the Justice Department.

In addition to Knudsen, the letter was signed by the attorneys general of Iowa, Kansas, Mississippi, North Dakota, South Dakota and Tennessee.

Source: Trains