Union Pacific Corp. and Norfolk Southern Corp. submitted a revised merger application to regulators that they say offers greater protections to customers, a move by the railroads to help complete what stands to be the industry’s biggest-ever deal.
The companies pledged four new or expanded commitments in a filing on July 27, including an enhanced oversight process, and allowances for customers to seek temporary alternate rail service in the event of service declines. They also plan to expand what’s known as committed gateway pricing, doubling the number of eligible shipments, and extending benefits to bulk unit train shippers.
The revision seeks to address outstanding questions from the U.S. Surface Transportation Board, which accepted the railroads’ original application but paused its review of the tie-up in May so Union Pacific and Norfolk could address matters “that are unclear or underdeveloped and require supplementation.” The companies were given a deadline of July 27.
U.S. rules require rail mergers to show that a deal would serve the public interest and enhance competition, a step beyond merger requirements applied to other industries. The STB asked the companies to submit additional information about issues including competition and benefits to the public.
The companies are looking to secure approval for the $72 billion merger announced last July. The deal has drawn pushback from peers including BNSF Railway Co., although Canadian National said last week it would not oppose the deal after it signed an agreement with Union Pacific that gave it direct operating rights over tracks between Memphis and Eagle Pass, Texas.
“We talk to our customers every day, and as we listened to them and reviewed the STB’s comments, we saw opportunities to provide additional assurances through an unprecedented set of voluntary commitments to our customers,” Jim Vena, chief executive officer of Union Pacific, said in a statement.
