The Interstate Commerce Commisdion won't rubber-stamp all proposed mergers of railroads that come before it, ICC Chairman Darius W. Gaskins Jr. said yesterday.
In a meeting called to discuss the agency's overall rail merger policy, Gaskins and other ICC members appeared to agree that preserving competition would play an important role in their evaluation of mergers that come before them. In the last three years, the ICC has approved three mergers, and mergers -- at least proposed mergers -- appear to be accelerating. The merger of the Chessie System and Seaboard Coast Lines is pending, and three other major mergers have been proposed: a combination of the Union Pacific, Missouri Pacific and Western Pacific; a merger of the old western rivals, the Southern Pacific and the Santa Fe; and a joining of the Southern with the Norfolk & Western.
"I think the perception is that we will take a laissez-faire attitude," Gaskins said yesterday. "But mergers have not been deregulated.
"And protecting competition will be important in evaluating them."
Although there are other elements to be evaluated, Gaskins said that competition becomes "even more significant" because of the changes in government policies toward the traditionally heavily regulated railroads. The underlying rationale is taking regulations off was that the railroads might operate better in a freer environment subject to competitive market forces."But the competition has to be real, it has to be viable, because that's going to protect shippers and the consumer," he said.
Though Thomas A. Trantum, like the others, agreed that mergers may offer potential benefits to the carriers involved or the public, he expressed concern that approval of many mergers could lead to a huge concentration of economic power in the hands of a few carriers, which could reduce competition and set the stage for more regulation.
"I think the burden should be on the applicants to show us why they can't achieve the same potential benefits some other way, a less anticompetitive alternative," he said. Trantum said he is "highly suspect" that economies of size really exist in the railroad industry and noted that the changing regulatory system will offer railroads new ways of achieving efficiencies without mergers.
Marcus Alexis and Reginald E. Gilliam Jr. expressed interested in evaluating the changes of actually achieving a merger's proposed benefits. "I would like to see what we might get in the form of rate reductions," Alexis said.
"If there are to be efficiencies, there ought to be benefits passed on to the shipping public."
While "not a member of the 'anything goes' school," Charles L. Clapp said he believes that the public interest isn't necessarily synonymous with competition and that his colleagues were downplaying the financial strength of the merger companies.
George M. Stafford raised the question of retaining adequate service for shippers. "I think mergers are the wave of the future, but let's try to protect the customers as much as possible," he said.
In approving the most recent mergers, the ICC has declined to impose conditions on the merger partners to protect the interests of other railroads that claimed they would be hurt. The commission has written that such conditions lessen the benefits of a consolidation to the merged company and the public unless there is no other way of providing essential services. Gaskins said that kind of condition is different than the kinds of conditions the agency might impose on the consummation of a merger if there were anti-competitive problems that could be fixed with a spinoff or other remedy.