FOR IMMEDIATE RELEASE                                          AT
MONDAY, JUNE 3, 1996                               (202) 616-2771
                                               TDD (202) 514-1888

                                 
                JUSTICE DEPARTMENT URGES DENIAL OF
              UNION PACIFIC/SOUTHERN PACIFIC MERGER

         Marks The Largest Railroad Merger Ever Reviewed

     WASHINGTON, D.C. -- The Justice Department today urged the
Surface Transportation Board to deny the proposed merger of the
Union Pacific Corporation and Southern Pacific Rail Corporation
because it would reduce competition for rail freight customers,
possibly resulting in $800 million a year in consumer price
increases.  Freight customers pay over $6 billion in rail charges
annually in the markets where competition would be lessened.

     The Department, in a brief filed with the Surface
Transportation Board, said that the merger would give Union
Pacific a monopoly in hundreds of markets, including Houston and
the Gulf Coast region as well as Colorado and Utah, and would
leave hundreds of other markets, such as Los Angeles, with only
two rail competitors.

     The Department told the Board that denial of the Application
-- without Board-ordered conditions -- is the most certain,
effective and expeditious way to preserve competition.  Given the
extensive divestiture that would be required to offset the
enormous competitive consequences, the Department advised the
Board that it would be difficult, if not impossible, for them to
fashion a remedy.  Furthermore, during the inevitable delay as
Union Pacific tried to sell off these tracks, they would enjoy
little to no competition in hundreds of major markets across the
country.    

     "This merger would mean higher shipping charges and would
cost consumers dearly," said Anne K. Bingaman, Assistant Attorney
General in charge of the Justice Department's Antitrust Division. 
"We recommend that the Surface Transportation Board reject the
merger proposal in the interest of preserving competition in the
rail freight industry and for the good of the American consumer."

     According to the Department's brief, major parallel lines
would have to be divested to other railroads in order to preserve
competition.  The Department said three major rail lines would
have to be sold:

     þ    one of the two parallel routes radiating from Houston,
          Texas, north through Little Rock and Memphis to St.
          Louis; east to New Orleans; west to San Antonio; and
          South to Brownsville;
     þ    one of the two Central Corridor routes from Oakland,
          California through Salt Lake City and Denver to Kansas
          City; and
     þ    lines between Los Angeles and Chicago or another
          eastern gateway.

The Department also specified that these divestitures would have
to be made to railroads other than Burlington Northern/Santa Fe.

     Union Pacific and Southern Pacific offered to grant
Burlington Northern/Santa Fe the right to conduct limited
operations over their track as a remedy to the competitive harm
the merger may cause.  The Department said this was an inadequate
proposal that does not preserve the existing competition that
Southern Pacific currently provides.

     The Department's brief further said that the competitive
harm from the merger would outweigh the claimed benefits, and
that Southern Pacific's financial condition was not so serious
that it would not remain a significant competitor for the
indefinite future.

     The Board is scheduled to announce its decision on July 3.
                               ###
96- 253