A coalition of top law enforcement officials is asking the Department of Justice to review the proposed transcontinental railroad merger of Union Pacific and Norfolk Southern.
The group of Attorneys General from six Republican states led by Montana’s Austin Knudsen claim that the east-west consolidation will stifle competition and increase costs for Americans.
The coalition in a letter asks Acting Assistant Attorney General Omeed Assefi to review the proposed merger, to provide additional analysis as the Surface Transportation Board (STB) evaluates the transaction.
The letter comes just days after DoJ’s Assistant Attorney General and anti-trust specialist Gail Slater was forced out in a dispute with Attorney General Pam Bondi. Though Slater’s thinking was generally in line with the Trump administration’s business-first policies, she was a skeptic of large, corporate mergers, particularly where it might harm competition, workers or communities, according to Steven Cernak of Bona Law.
The Justice Department will make a recommendation on the merger to President Donald Trump; a final decision will be voted by the members of the STB.
The letter also comes as Trump’s approval rating continues to sink amid rising consumer prices on goods ranging from bananas to electricity.
Union Pacific (NYSE: UNP) plans to file an updated merger application with the STB by March.
A preliminary review by the attorneys general found the companies have failed to adequately address the clear loss of horizontal competition, raising antitrust concerns, the AGs said in a release.
“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,” Knudsen wrote in the letter. “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 said the merger – which if approved would shrink the number of U.S. Class I railroads from four to three – “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.
“Although Union Pacific claims the merger will result in increased growth and efficiency, the attorneys general also highlighted the importance of DOJ’s review of the deal considering the company’s nearly decade-long decline in rail service.”
The letter was signed by attorney generals from Iowa, Kansas, Mississippi, North Dakota, South Dakota, and Tennessee.
Read more articles by Stuart Chirls here.
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