implemented by a small  group of employees and outside counsel who remained together for the next 40 years, coalescing into a well-oiled machine with an encyclopedic knowledge of the US railroad network. Together, this team put UP in the forefront as the industry leader on merger review and regulatory processes.
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Listen as three veterans of Union Pacific’s merger team pull back the curtain on the analysis and strategic planning that drove the mergers and acquisitions of the nation’s largest Class I railroad.

Background Note:
 

To fully appreciate the content of this interview, it is important to understand that, unlike other U.S. industries which have been relatively free to pursue mergers and acquisitions without government interference, railroad consolidations have long been subject to intensive regulatory review, manifesting in contentious and lengthy proceedings.  By the 1960s, Class 1 railroads, hobbled by excessive federal economic regulation and confronting government-funded highway and air competition, were driven toward mergers and acquisitions.  Many of the resulting Interstate Commerce Commission (ICC) review proceedings infamously lasted years, as the ICC tried to satisfy every possible interest without clear policies.  The poster child for regulatory delay, interference, and abuse was the Union Pacific-Rock Island proceeding, which consumed ten years from 1964 to 1974 and resulted in Rock Island's later bankruptcy, as discussed in the interview. 
 

More than any other proceeding, UP-Rock Island pushed Congress to reform merger regulatory review.  In 1976, Congress imposed a three-year deadline on consolidation proceedings and curtailed the ICC's decision-making standards.  In this new and evolving regulatory environment, the Union Pacific Merger Team formed to guide Union Pacific's remarkably successful passage through waves of ongoing rail consolidations, framing and supporting UP's merger objectives and initiatives and resisting harmful transactions by other railroads. 
 

The shortened regulatory proceedings addressed a narrower range of still-contentious issues in the last quarter of the 20th Century.  The ICC (succeeded by the Surface Transportation Board (STB) in 1996) approved combinations of Class 1 railroads when their public benefits outweighed harm to competition.  In practice, regulators allowed no harm to competition and imposed modifications to protect it, although parties debated what constituted "competition." Defining competition more loosely than the ICC and ignoring public benefits, the Department of Justice routinely opposed rail combinations, but the regulators usually overrode its objections.   Public benefits consisted of improved service and increased efficiency, which in that era generally reduced prices for shippers, who saved many billions of dollars thanks to mergers.
 

Regulators adopted even shorter timeframes for merger proceedings in the mid-1990s, as the ICC was eliminated and rail regulation moved to the new STB.  Proceedings were limited to a very intense 12 months, as exemplified by the huge Union Pacific-Southern Pacific case.  In 2000, after most Class 1s had merged or failed, the STB added a requirement that any further consolidations among remaining Class 1s (except KCS) must increase rail competition.