The Interstate Commerce Commission yesterday unanimously approved Norfolk Southern Corp.'s proposal to purchase North American Van Lines from PepsiCo Inc. for $315 million.
The decision, made in a series of public votes, gives the go-ahead to the first attempted acquisition of a major trucking company by a major railroad. The deal could become an important test case if the ICC's decision is challenged in court. A final, written ICC decision will follow in 30 to 60 days.
"Obviously we're delighted at the commission's action," Norfolk Southern spokesman Magda Ratajski said. She added that "anything concerning what will and will not be done will be considered after the actual decision is rendered."
For years, the ICC forbade common ownership of railroads and trucking companies except under "stringent special circumstances." Since deregulation of both businesses, the ICC has changed its policy. That policy shift has been challenged in court.
Norfolk Southern, a railroad holding company, has been seeking ways to extend its routes beyond the Southeastern United States where most of its track lies.
North American Van Lines has divisions besides its household moving operations. If the acquisition is completed, North American trailers will be able to move on Norfolk Southern flatcars where the line has railroad tracks. The truck then could extend Norfolk Southern's "track" north of its present terminus at Potomac Yard in Alexandria and west from the end of the line in Chicago, Memphis and New Orleans.
Norfolk Southern's attempt to purchase Conrail from the federal government is also part of overall corporate strategy of extending its service area, but was not a factor in the ICC debate on the North American transaction.
There was not even a hint of opposition as the commissioners discussed the acquisition yesterday. The public record shows complaints from only the United Transportation Union, the Teamsters and the Regular Common Carrier Conference (RCCC) of the American Trucking Associations.
Richard Hinchcliff, RCCC executive director, said "we don't believe in common ownership." Under such arrangements, holding companies "are in a position to shift expenses and incomes in a way they could become anticompetitive," he said.
In response to questions from Commission Chairman Reese H. Taylor Jr., Louis E. Gitomer, deputy director of the ICC's rail section, agreed that North American's earnings represented such a small percentage of Norfolk Southern's that shuffling money among entities might cost more than it was worth.
Gitomer told the commissioners that the acquisition presents "a number of advantages. The major point is that shippers will have a one-stop shopping center" for movements that would require both rail and truck.
Norfolk Southern Chairman Robert Claytor has said that he wants his firm to be a "full transportation company." It now owns two railroads, the Southern and the Norfolk and Western, it has a 2 1/2 percent interest in Santa Fe Southern Pacific Corp., another railroad holding company, and 17.8 percent of Piedmont Airlines.