On July 29, rail operator Union Pacific announced the $85 billion acquisition of Norfolk Southern. In a new insight, Director of Competition Policy Fred Ashton explains how, despite antitrust scrutiny, the merger will likely provide efficiencies that could lower costs to shippers and reduce rail interchange delays.

Key points:

• The proposed acquisition would create the first transcontinental railroad in the United States operated by a single firm.
• The combination – to be named The Union Pacific Transcontinental Railroad – would link Union Pacific’s western operations with Norfolk Southern’s eastern rails, connecting more than 50,000 route miles across 43 states, and link approximately 100 ports.
• The Surface Transportation Board, the regulator responsible for assessing the merger’s effect on competition, will need to weigh efficiency gains with the possibility of blocking connecting tracks for rivals; the review will be conducted using the agency’s new merger guidelines, which substantially increased the burden on merging firms.

Read the analysis.