The Justice Department said yesterday that it will not oppose the proposed merger of Norfolk and Western Railway Co. and Southern Railway Co.

Last March the Justice Department filed comments with the Interstate Commerce Commission saying the proposed merger might create several competitive problems involving, among other things, rail traffic in Virginia and North Carolina and coal delivery from central and southern Appalachian coal fields. The department also noted possible future competition for coal exports from the Atlantic and Gulf coasts.

At that time, the Justice Department also said it hadn't yet taken a position on the merits of the merger.

Yesterday the department said in a letter to Judge David H. Allard, the administrative law judge conducting the ICC hearing on the merger, that the proposed merger is unlikely to cause any significant anticompetitive effects.

N&W operates 7,454 miles of track in the Midwest, West Virginia and Virginia and earned $1.57 billion in operating revenues last year. It carries mostly coal and transportation equipment. Southern operates 10,215 miles of track in 13 states mainly in the Southeast. It earned $1.64 billion in operating revenues last year and carries coal, pulp, paper products and chemicals.

Recently, the department declined to oppose the mergers of Chessie System and Seaboard Coastline Industries last year and Burlington Northern and St. Louis-San Francisco Railway in 1979. Both were approved by the ICC.