Railroad Merger Proposal Raises Competition Concerns

Federal officials this week are expected to rule on a controversial proposal to merge Union Pacific and Southern Pacific railroads.

The $5.4 billion deal would create a 37,000-mile rail network linking 25 states, Mexico and Canada.

But it also might create a legalized duopoly of the nation’s rail system. The new rail giant and its main rival, the Burlington Northern Santa Fe, would control 90 percent of all rail traffic west of the Mississippi River.

The Surface Transportation Board, successor to Interstate Commerce Commission, today will hear final arguments in Washington, D.C. The board is expected to rule on the merger plan Wednesday.

Omaha-based Union Pacific claims more than 2,000 letters of support for the merger from customers, port operators, politicians, unions and others. The merger, it predicts, would create an annual savings of $750 million that would be passed onto shippers.

But the Department of Justice predicts that shipping rates will rise 10 percent to 19 percent if the merger is approved.

Meanwhile, Montana Rail Link has asked the government to order Union Pacific to sell it more than 1,000 miles of track from Kansas to California as a condition for approving the merger.

In other events this week:

Today

The National Association of Purchasing Management in New York issues its report on the manufacturing economy during June.

Detroit automakers begin reporting their sales figures for June.

U.S. Department of Commerce releases May personal income, spending.

Ireland takes over six-month presidency of European Union.

Tuesday

Federal Reserve’s Open Market Committee meets in Washington, D.C., through July 3.

Commerce Department releases May new home sales.

Wednesday

Commerce Department releases May factory orders.

Presidential runoff election between Boris Yeltsin and Gennady Zyuganov.

Thursday

Independence Day. Financial markets closed.

The nation’s largest retailers release their sales reports for June.

Government Conference for 14-nation Caribbean Community meets in Bridgetown, Barbados.

Friday

National NAACP convention opens in Charlotte, N.C., continuing through July 11.

U.S. Department of Labor and the Idaho Department of Employment release June employment figures.

Saturday

American Library Association opens annual conference in New York City to discuss “Equity on the Information Superhighway.”

Sunday

International conference on AIDS opens in Vancouver, B.C.

, DataTimes ILLUSTRATION: Graphic: Total employment

MEMO: This sidebar appeared with the story: ON THE SHELF Business Week, July 1: Japan’s economy is stronger and companies are preparing for a new assault on U.S. markets. One target: auto leasing. Japan auto makers are lowering monthly lease payments to grab a larger share of business.

The games begin Expect to see lots of cars, burgers and cokes during this year’s Olympic Games. A group called Competitive Media Reporting compiled a list of the top television advertisers during the last three summer Olympics. 1984: McDonalds, $33 million; Coca Cola, $30 million; Sears Roebuck, $27 million. 1988: General Motors, $55 million; McDonalds, $36 million; Coca Cola, $31 million. 1992: General Motors, $34 million; Coca Cola, $33 million; McDonalds, $22 million.