4 Railroads Object to Union Pacific-Norfolk Southern Merger
Railroads Ask Surface Transportation Board to Reject $85 Billion Deal
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CSX Transportationand three other railroads filed requests this week that theSurface Transportation Boardreject Union Pacific Corp.’s application for approval to acquireNorfolk Southern Corp.and return it for more information.
The documents were all uploaded to the STB website. The requests by CSX,BNSF Railway,Canadian Pacific Kansas City Southern and Grand Trunk Railroadcite similar concerns about information they say is lacking in the application filed by UP onDec. 19.
On Jan. 2,Union Pacificfiled its response, saying the information is indeed in its application.
In late July,Union Pacific Corp.andNorfolk Southern Corp.announced they had reached an agreement in which UP would acquire NS in a deal with a market value of $85 billion, after which NS would be absorbed into the UP system.
Shareholders ofNorfolk Southern Corp.andUnion Pacificvoted Jan. 2 to approve the agreement that allows UP to buy and absorb NS in a deal valued at $85 billion.
OnJuly 30,Union Pacificfiled notice with the STB of its intent to file an application for STB approval of its plan to acquireNorfolk Southern.Union Pacificfiled its application onDec. 19. Monday was the deadline for interested parties to file comments challenging the completeness of the application. UP had until noon Friday to file its reply to those challenges.
Shareholders ofNorfolk Southern andUnion Pacificvoted Jan. 2 to approve the agreement.
CSX Objections, UP Responses
UP is most active west of the Mississippi River, where its main competitor isBNSF. It also competes with CPKC in that region.Norfolk Southernoperates primarily east of the Mississippi, where CSX is its main competitor.
CSX lists several objections to the application filed byUnion Pacific. Among CSX’s assertions the application does not:
- Include the merger agreement between UP and NS, contrary to STB regulations.
- Address (contrary to STB rules) how the merger of UP and NS would affect the two railroads’ main competitors as they react to the UP/NS combination.
- Identify the “additional measures” that would be taken if the anticipated public benefits of the merger fail to materialize.
- Identify the merger’s claimed benefits that could be achieved through means short of a merger.
- “Each of these deficiencies renders the Application incomplete,” CSX concludes in its filing.
BNSF’s filing said the application “only superficially grapples with the serious issues the proposed merger creates for shippers, American businesses, the rail industry, and the American economy.BNSFidentifies certain merits issues now because they impact the schedule and information exchange that is needed to address the application.”
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BNSFadded it is concerned that UP and NS may attempt to supplement their submission to address the many deficiencies in it at a later date without sufficient time for other parties to provide comments and for the STB to fully consider the supplements and comments.
As CSX did,BNSFsaid UP and NS “all but ignore the merger’s effects on geographic and product competition.”
CPKC and Grand Trunk made similar assertions.
In its 36-page response posted to the STB website on Jan. 2,Union Pacificdisputed the assertions of its four competitors.Union Pacificsaid:
- Despite its competitors' "baseless claims," the application includes the full system analysis as required by STB rules.
- The application "appropriately addresses actual and projected" market shares, geographic competition and vertical competitive effects.
- It addressed how the acquisition ofNorfolk Southernwould enhance competition.
- The application does include the merger agreement between UP and NS.
Union Pacifichas said it expects the STB review process to extend into early 2027.
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