FOR IMMEDIATE RELEASE                                          AT
FRIDAY, APRIL 12, 1996                             (202) 616-2771
                                               TDD (202) 514-1888

         JUSTICE DEPARTMENT HAS ANTITRUST CONCERNS ABOUT
          UNION PACIFIC/SOUTHERN PACIFIC RAILROAD MERGER

      ANTITRUST DIVISION FILES PRELIMINARY COMMENTS WITH THE
                   SURFACE TRANSPORTATION BOARD

     WASHINGTON, D.C. -- The Justice Department's Antitrust
Division today said that the Union Pacific Corp./Southern Pacific
Rail Corp. proposed merger raises significant competitive
concerns in a large number of markets throughout the West and may
result in price increases to shippers and consumers of roughly
$800 million.  The volume of commerce affected is more than $6
billion.
     The Department, in comments filed with the Surface
Transportation Board, said that the proposed deal would adversely
affect a large number of markets throughout the West where the
number of possible rail carrier competitors would decline from
two to one or from three to two.
     "The Department is concerned that this transaction will
create monopolies or duopolies for crucial transportation
services that industries and consumers depend upon throughout the
U.S.," said Anne K. Bingaman, Assistant Attorney General in
charge of the Department's Antitrust Division.  "Only through
competition can consumers be assured of the best price," Bingaman
added.
     The Department said that Union Pacific and Southern Pacific
railroad systems have significant overlaps, including lines
through the Central Corridor--which stretches between northern
California through Salt Lake City and Denver to Kansas City,
Missouri--and lines running from Texas through Little Rock,
Arkansas, and Memphis, Tennessee, to St. Louis and Chicago.  The
two railroads compete for significant amounts of traffic in a
large number of markets, and in some places where they compete,
are the only rail carriers providing service.
     The remedy proposed by the two parties--an agreement to
grant more than 3,800 miles of trackage rights to Burlington
Northern/Santa Fe--appears to be inadequate to prevent rate
increases in markets where the number of rail carrier competitors
would decline from two to one, and does not remedy the effects of
the transaction in markets where the number of competitors would
decline from three to two, the Department said.
     The affected markets involve commodities such as wood and
agricultural products, iron and steel, plastics and intermodal
traffic, moving in hundreds of corridors throughout the West. 
The total volume of traffic where the number of competitors
decline from two to one is more than $1.5 billion.  In markets
where the number of competitors decline from three to two, the
total volume of traffic is more than $4.75 billion.  
     The Department said that the agreement with Burlington
Northern/Santa Fe is unlikely to ensure effective competition
because Burlington Northern/Santa Fe would have to pay Union
Pacific/Southern Pacific an excessive compensation rate for
trackage rights, the agreement gives inadequate guarantees to
ensure Burlington Northern/Santa Fe's service quality and other
factors exist that reduce Burlington Northern/Santa Fe's
incentive to compete using the trackage rights.
     The Department said that Union Pacific and Southern
Pacific's claimed efficiencies appear to be vastly overstated and
insufficient to outweigh the probable rate increases.  The
Department also said that Southern Pacific is likely to survive
for the foreseeable future and remain a significant competitor.
     Union Pacific, based in Bethlehem, Pennsylvania and Southern
Pacific based in San Francisco, are two of only three major
railroads in the western half of the United States.  Union
Pacific operates about 22,000 miles of track and Southern Pacific
about 16,700.  
     Union Pacific's 1995 revenues total about $7.5 billion. 
Southern Pacific's 1995 revenues total about $3.2 billion.  The
merger would create the largest U.S. railroad in terms of
physical size and revenues.
     The Department will file its final brief to the Surface
Transportation Board on June 3, 1996.  The Department is
participating as a full party in this proceeding. 
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