Bill Would Toughen Rail Merger Standards

May 24, 2000

Rep. Earl Pomeroy (D-ND) has introduced a bill to toughen review standards for railroad mergers and subject the industry to antitrust laws for the first time in history. The bill comes as a 15-month moratorium on major rail mergers is underway, imposed by federal regulators who are studying what changes may be needed.

Under Pomeroy’s bill, the Surface Transportation Board would subject future proposed rail mergers to tighter guidelines. Grain shippers, energy companies, timber firms and others have complained that the recent rail mergers brought congested traffic and poor service.

In his floor statement on the bill Monday, Pomeroy said the rail industry is the only industry, except for baseball "that is almost entirely exempt from the substance of the antitrust laws. With the rail industry now consolidated to seven major railroads and the stage set for a possible final consolidation, there is an increased potential for the rail industry to exercise market power and monopoly abuse against shippers.

"In order to protect shippers and promote true competition, it makes sense to treat the railroads like other industries and subject them to the jurisdiction of the Department of Justice and full application of antitrust laws."

The bill also imposes a regulatory framework under which the Justice Department would approve a merger unless it substantially restrained commerce in any section of the country or tended to create a monopoly in any line of commerce. The STB still would be required to review and approve a merger under a similar standard, but it also would judge the proposed merger by a broader public interest standard. Both Justice and the STB would have to approve a merger before it could be finalized.