/Reuters Agency
A group of nine Republican state attorneys general expressed concern about competition regarding Union Pacific’s plan to acquire its smaller rival, Norfolk Southern, in an $85 billion deal aimed at creating the first coast-to-coast freight rail operator in the United States.
The officials, led by Tennessee Attorney General Jonathan Skrmetti and Kansas Attorney General Kris Kobach, sent a letter to the Surface Transportation Board, seen by Reuters, expressing their concern that the deal “will result in excessive market concentration that will stifle competition and thus lead to higher prices, lower reliability, and less innovation, to the detriment of American manufacturers and, ultimately, the country’s consumers.”
The merger, if approved, could transform the U.S. freight rail industry and help streamline operations, eliminating delays in exchanges at key hubs like Chicago.
The state attorneys general – who also include those from Ohio, Florida, North Dakota, South Dakota, Mississippi, Montana, and Iowa – noted that the merger could lead to high internal transportation costs that “could paralyze the ability of American companies to compete with foreign manufacturers.”
They also warned that “the indirect impact of the merger represents a significant risk not only to our industrial base, but also to our agricultural producers. Ultimately, this merger could compromise our national security.”
Union Pacific stated that it looks forward to presenting its application to the Surface Transportation Board (STB) “to detail how this merger is beneficial for the United States, meets the criteria of promoting the public interest, and enhances competition.” The railroad company added that it has secured the support of key unions and other stakeholders “to ensure that the railroad does not fall behind.”
Previously, both railroad companies reported that over 99% of shareholders from both sides voted in favor of the deal. The STB’s review could take between 12 and 18 months.
The railroad industry has faced difficulties due to volatility in freight volumes, rising labor and fuel costs, and increasing pressure from shippers for service reliability.
In September, President Donald Trump commented that the merger “seems fine to me” after meeting with Union Pacific’s CEO, Jim Vena, to discuss the deal, considered the largest railroad merger in the United States in decades.
Union Pacific dominates freight rail operations in the western United States, while Norfolk Southern is a leading carrier in the east. Together, they form two of the four major Class I railroad companies in the United States, alongside BNSF Railway and CSX Corporation.
