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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 a merged railroad in raising prices or reducing service standards.

Union Pacific reported that it spoke with over 100 customers regarding "low-cost rail options", adding that they would include all the details in their Surface Transportation Board application.

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.

Norfolk Southern has not responded to requests for comment immediately.

Earlier, the Transportation Division of 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)