The Interstate Commerce Commission yesterday approved the merger of the Burlington Northern and the St. Louis-San. Francisco railroad companies.
The merger of the 25,000-mile Burlington Northern and the 4,700-mile Frisco will result in the creation of the longest railroad in the nation's history. The Burlington Northern, already the nation's largest rail line in terms of total miles of track, was the creation of a merger of four railroads in 1970, although its predecessors had been in the railroad business since 1849.
The newly combined railroad company will operate in 25 states and two Canadian provinces, spanning the continent from the Pacific Northwest and the Great Lakes to the Gulf Coast.
First proposed in December 1977, the merger will provide freight rail service over a single line for the first time from Vancouver, British Columbia, through the central United States to Birmingham and Mobile, Ala., and from Winnipeg, Manitoba, to Houston, Texas.
"The merged company will be able to provide new single-line service, reduced transit times, more efficient and frequent service and improved car utilization," the ICC said in a unanimous decision.
The new company, which will retain the name of Burlington Northern, Inc. (BN), will have assets in excess of $4 billion. At the end of 1979, BN had assets of $4.2 billion. Its net income in 1979 was $175.6 million. The Frisco closed out the year with assets of $671.4 million; it reported net income of $19.8 million.
The ICC imposed some conditions on the merger partners for two years to protect competing railroads in the areas of trackage rights and routing to give them "sufficient time to adjust to the new competitive climate."
But the agency generally rejected the claims of harm raised by the competing railroads opposing the merger as "somewhat exaggerated." No competitor of the BN or the Frisco would be eliminated as a result of the merger, the ICC said. On the contrary, "competition will be enhanced by carriers willing to go the extra mile to show shippers that their service is or can be as good as that of the merged company," the ICC said.
Overall, the nearly 400-page opinion of the ICC set a tone that should hearten the partners in other proposed mergers pending at the commission. "When carrier operations can be made more efficient and less costly wihtout disrupting essential services, it is in the public interest to approve the result," the agency said in a general discussion of its decision-making.
"In this manner our national economy can benefit from the efficiencies and cost reductions through either price reductions or a forebearance to raise prices," the ICC said.
Other major rail mergers pending at the ICC would combine the Chessie System and the Seaboard Coast Lines into the second largest rail system in the country, and the Union Pacific and the Missouri Pacific into the third largest.
Because the combined railroad will be able to operate trains over long distances without having to switch freight cars to other railroads, time and resources will be saved.