Latest Rail Merger Plan Faces Added Scrutiny

Burlington Northern Santa Fe Corp. and Canadian National Railway Co.’s plan to create North America’s largest railroad will face expanded regulatory scrutiny, the U.S. Surface Transportation Board said. The board is changing its merger review policy to give customers and competitors wider latitude to comment on the merger’s long-range impact. Combining Canada’s largest railway and the second-biggest U.S. railroad would create a company with $12.5 billion in revenue and overtake Union Pacific Corp.’s rail unit, which struggled for more than a year to absorb Southern Pacific Rail Corp. after its 1996 purchase. “They are giving CN and BNSF a heads-up to alert them that this is going to be viewed as something other than an end-to-end merger,” said Edward Emmett, president of the National Industrial Transportation League, a rail shippers trade group. On the New York Stock Exchange, CN shares slipped 76 cents to close at $25.94, while Burlington Northern closed up 6 cents at $24. The merger plan, structured according to Canadian law, would create a new Montreal-based company, North American Railways Inc., run by current Canadian National management.