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Could have the SP survived without UP
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After reading all this, one has to wonder why the logic of merger won't eventually extend to UP + BNSF, CSX + NS, CN + KCS, and basically any other combination? If your answer is "Well, the STB wouldn't allow such a scenario, therefore it won't happen", why not? The STB under Linda Morgan during the decade of fraud has shown that parallel mergers are just fine, mergers that leave huge sections of the country under single Class I control are just fine, mergers that result in capital expenditure shifts from one section of the country to another section of the country are just fine, etc. so long as the CEO's get theirs and the regulators are promised theirs after their government gig is up. <br /> <br />The caveat of maintaining the semblence of consumer choice and national economic security in an industry where entry of new service providers is nearly impossible has been apparently thrown out by STB overlords. Don't kid yourselves about todays railroads being this tremendous asset to the nation, only certain segments of the nation are being given the benefits of the partial deregulation. We have the remaining two railroads in the West throwing what capital improvement funds they are willing to expend on the LA - Chicago corridor, and very little elsewhere. There is no incentive to develop more logical rail corridors due to lack of political pull in these regions, along with the lack of full control by one railroad or the other over other rail corridors. The I - 15 corridor is a logical NAFTA rail corridor, except UP owns all of it from Butte MT to LA, while BNSF owns the portion from Butte to the Canadian border (and apparently is letting much of that go to scrap). Since todays railroads demand monopoly control over point to point trackage before they'll spend on those corridors, the I -15 is left to rust. Maybe a UP + BNSF merger will finally open up that corridor, if BNSF hasn't already scrapped a key link by then. <br /> <br />Lord knows BNSF will tear up the trackage before they'd sell it to a competitor, and UP would do the same rather than sell to BNSF. Is there any other industry in the U.S. where a closed or underutilized asset is destroyed rather than sold to a possible competitor? If a Safeway grocery store is shut down, they don't tear down the building and walk away, they put it on the market and hopefully get a buyer, even if the buyer ends up being a competitor. The same exists if the buyer is a third party developer intent on reselling it to a competitor of Safeway. If Safeway tried to insert a clause in it's sale contract to a third party that they must never resell or lease the asset to an Albertsons or Tidymans, it wouldn't take long for a judge to strike down that clause. Yet today's railroads are rife with such contractual inhibitors when they decide to sell to a shortline operator. If Safeway tried to tear down the building rather than sell it, that action too would probably be struck down by a judge. Yet railroads are allowed to do that very thing when they tire of a certain section of track. <br /> <br />How are railroads able to do this? They were allowed to do so by the regulatory bodies as a caveat of regulation. Then when Staggers came along, instead of the ICC/STB synchronizing this action into a prevailing characteristic of business law in conformity with other industries, they are allowed not only to continue the act of infrastructure destruction, they actually accellerate this destruction. <br /> <br />Well, can affected shippers and regions appeal to the Sherman Anti-trust laws? Nope, Staggers still exempts the railroads from this protection too. <br /> <br />If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. <br /> <br />So I ask again, what is stopping (in the legal sense) an eventual merger of all Class I's into one big company? Nothing in Staggers. Nothing in any anti-trust laws. No one at the STB, FRA, USDOT. Right now the only thing stopping these eventual mergers is calculated PR. The predator must be patient, carefully stalking it's prey until the moment is right, only then can it envelop it's prey. Those folks perceptive enough to take "stock" in this hunt will eventually be rewarded, barring any drastic changes in the management of the wilderness.
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