RAILROAD MERGER BLASTED : UP-SP DEAL CALLED ANTI-COMPETITIVE.

Byline: Michelle Mittelstadt Associated Press

The proposed $5.4 billion marriage of Union Pacific and Southern Pacific railroads would be ``the most anti-competitive rail merger in our history,'' the nation's chief antitrust law enforcer said Monday.

Assistant Attorney General Anne Bingaman appeared before the Surface Transportation Board to urge rejection of the deal, just two days before the panel will decide whether to allow creation of the nation's largest railroad.

Decreased rail competition would lead to higher prices for shippers and eventually consumers, Bingaman said. ``Approval of this merger would result in a monopoly in many markets and a rail duopoly throughout the West forever,'' she said.

But defenders of the deal, which would put 90 percent of all freight traffic west of the Mississippi in the hands of UP-SP and rival Burlington Northern-Santa Fe, said shippers would benefit from access to new routes and increased corporate efficiency.

Union Pacific, headquartered in Bethlehem, Pa., has pledged to spend significant sums to shore up the flagging fortunes of San Francisco-based Southern Pacific. Merger supporters suggest the combined railroad would be able to compete more effectively with Burlington Northern-Santa Fe of Fort Worth, Texas, now the nation's largest railroad.

Burlington Northern doesn't oppose its rivals' deal, under which it would gain access to some 3,900 miles of track.

UP-SP would control more than 35,000 miles of tracks in 25 states, Mexico and Canada.

``Rates will continue to go down and competition will be incredibly vigorous,'' Union Pacific lawyer Arvid Roach told the board. ``Rail competition is vital. It is the heart of this transaction. We're increasing it, not decreasing it.''

The contradictory conclusions came as no surprise.

Supporters and opponents have waged intense lobbying campaigns since the proposal surfaced last year, seeking to sway politicians, business executives and the public.

``There has been much rhetoric and much hyperbole on both sides,'' Surface Transportation Board Chairwoman Linda Morgan observed dryly.