The proposed merger between Union Pacific Railroad (UP) and Norfolk Southern Railway (NS) is facing mounting resistance - and for good reason. This week, a large diverse coalition of more than 60 trade associations, chambers, and businesses representing critical sectors of the U.S. economy sent a letter to the Surface Transportation Board (STB) urging caution. These organizations, including the American Chemistry Council, warned that the deal could undermine competition, disrupt supply chains, and raise costs for businesses and consumers alike.
Nationwide Pushback
A long list of Democrats and Republicans from across the country, including U.S. Senators, state attorneys general and GOP leaders along with railroads, unions, farmers, energy producers, and manufacturers, are urging the Administration to hit the brakes on this dodgy merger.
Economic experts are also lining up to raise the alarm. Steve Cortes, a conservative champion of free markets, points out in his Washington Examiner editorial (When railroads get too big, America gets run over): “when two giants merge and start running the whole show, that’s not capitalism anymore. That’s called a monopoly, which usually leads to consumers paying more for less.”
Former Acting Chairman of the Council of Economic Advisers in the Trump administration, Tomas Philipson explains in his Washington Times editorial (Don’t allow the Union Pacific-Norfolk Southern merger): “The American economy has thrived for more than two centuries because our markets are open, competitive and disciplined by consumer choice. That’s what drives innovation, productivity, and lower costs. When you remove that discipline — when a handful of big players carve up an industry — you don’t get capitalism; you get cartelization. That’s exactly what this merger threatens to bring to America’s rail system.”
Monopoly Concerns
History tells us that rail consolidation comes at a steep price: fewer choices, higher transportation costs, major service disruptions, and reduced economic competitiveness. Today, just four Class I railroads control more than 90% of freight rail traffic. The proposed UP and NS deal – the largest rail merger in U.S. history – would give one railroad control over 40% of all rail traffic and more than half of all chemical product shipments.
The newly formed UP/NS would wield supercharged monopoly power over suppliers and manufacturers across the country. There are also significant concerns that this merger would benefit foreign importers and disadvantage domestic manufacturers and farmers.
No Antitrust Safety Net
Freight railroads operate under a different set of merger and antitrust laws. That means that railroads are immune from many traditional antitrust backstops that regulate and prevent monopolistic behavior to protect shippers and consumers. This makes the UP–NS deal even riskier when it comes to promoting rail-to-rail competition and safeguarding supply chains.
More Competition – Not Less
The Surface Transportation Board is the sole agency reviewing this deal, and under its own rules, any merger must enhance rail-to-rail competition - not just preserve it. So far, UP-NS have failed to demonstrate how they would achieve that goal. In fact, they have failed to show how this merger would do anything but reduce competition among railroads.
Better Deal
The STB must scrutinize this proposal with the utmost care and reject it if it fails to promote rail-to-rail competition. The stakes are too high for our economy, our supply chains, and American competitiveness to get it wrong. America needs a better deal - one that strengthens supply chains, lowers costs, and puts U.S. producers first. Not a merger that locks in monopoly power for railroads.
You can learn more at ACC’s rail merger webpage or visit the Rail Customer Coalition website.
