The western rival of Union Pacific said that the carrier’s latest regulatory filing doesn’t change the fact that the merger with Norfolk Southern will raise rates for shippers, and prices for consumers.
“We are continuing to review the additional information submitted at the request of the Surface Transportation Board in regard to the proposed UP-NS merger,” said BNSF (NYSE: BRK-B) President and Chief Executive Katie Farmer, in a statement Tuesday. “Despite UP (NYSE: UNP) and NS’s (NYSE: NSC) fourth attempt to submit a complete application, the bottom line remains the same. UP and NS have not changed the core of their proposal that fails to demonstrate how combining two major railroads into a single carrier would preserve – much less enhance – competition as required by the STB’s merger rules.’
The merging railroads on Monday completed the supplemental filing requested by the STB when it conditionally accepted the second merger application in late May.
“UP and NS highlight several so-called new aspects of their application, but they are more of the same – processes with multiple caveats that are difficult to understand, available to very few customers and only available for very short periods of time,” Farmer said. “They do nothing meaningful to mitigate the massive anticompetitive impact of 50% market share held by one company.”
The combined UP-NS would claim around 37% of North American rail traffic, according to data from Railfax. The partners’ just-announced operating agreement with Canadian National (NYSE: CNI) would add another 13% share to the total.
“For example, they tout a dramatic expansion of their CGP (Committed Gateway Pricing) proposal, but it would only be available to about 1% of rail shipments, would disappear after a few years and – as UP and NS’s application makes crystal clear – would actually raise rates for most of the shippers who ever use it,” Farmer said. “UP cannot credibly claim that this even preserves competition and meaningfully protects rail customers.”
Those gateways would cover important interchange hubs such as Chicago, St. Louis, and the border with Mexico.
Said Farmer, “The additional data submitted by UP does not change the fact that this would be an anti-competitive transaction between two financially healthy companies that will reduce competitive options and raise rates on rail customers, result in higher prices for consumers and thus do great harm to the American economy and broader supply chain.”
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