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FT reports that rail customers are urging regulators to stop the Union Pacific-Norfolk Southern merger.

The Financial Times reported that U.S. railroad customers groups had demanded that regulators block the merger between Union Pacific and Norfolk Southern or impose onerous conditions.

The report stated that seven associations of shippers expressed concerns about the proposed deal, stating it would increase the power of merged railroads to raise prices and reduce service standards.

Union Pacific announced last month that it would purchase smaller rival Norfolk Southern for $85 billion. This will create the U.S.'s first coast-to-coast rail freight operator, and transform the movement of goods across the nation from grains to automobiles.

According to the companies, it is expected that both railroads will have a combined value of $250 billion. They would also unlock annualized synergies worth about $2.75 Billion.

Could not verify immediately the FT Report.

Norfolk Southern and Union Pacific have not responded to our requests for comment.

Earlier, SMART, International Association of Sheet Metal, Air, Rail and Transportation Workers, announced that it would oppose the merger at the Surface Transportation Board review.

The major railroad unions are opposed to consolidation. They claim that such mergers could disrupt rail service and threaten jobs.

Chuck Schumer, the Senate Democratic Leader, also criticised the merger. He said that the deal would "push us even further down the path of dangerous consolidation and power monopoly... This is an aggressive takeover of America’s infrastructure.

(source: Reuters)