Controversial Merger Creates Country's Largest Railroad

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WASHINGTON, D.C.: A federal transportation board approved the formation of the country's largest railroad company Wednesday despite opponents' claims that the merger of Union Pacific and Southern Pacific would force out competition in the 25 states the two railroads serve. With the completion of the deal, just two railroads, the combined UP-FP and the Burlington Northern-Santa Fe, will control more than 90 percent of all freight traffic west of the Mississippi. Several smaller railroads had opposed the merger, and federal regulators had called the deal "the most anti-competitive rail merger in our history." But Union Pacific lawyers successfully argued that the deal would result in greater efficiencies of scale and improved service. "The fear is that in a large-scale merger, the resources of the newly-formed company will be so great that it can engage in predatory pricing that will force competitors out of business," says TIME's Bernard Baumohl. "Consumers can enjoy lower prices in the short-term, but prices are likely to go back up once the competition has been wiped out." As a condition of approval, the board ruled that the newly formed company, UP-FP, must open up 4000 of its 35,000 miles of track to competitors. which will be available as of July 18 Lamia Abu-Haidar