Administrative Law Judge erred in finding that the joint application meets the threshold public interest standard required by statute. Both argue that the joint application presents serious. anticompetitive aspects. Although the Administrative Law Judge did note these factors, the parties feel that they were not given sufficient weight.

RPC argues that the record on the joint application is essentially neutral concerning many of the public interest criteria that must be met in order for an application to be approved. Both maintain that the joint applicants have presented no benefits for the Commission to weigh against the anticompetitive factors of their proposal. They state that the Administrative Law Judge erred by not making a finding that the joint application is hostile to the public interest because no common carrier responsibility was assumed for the continued operation and service of DTI under joint applicants' control. RPC and Justice would have us deny the joint application and affirm the initial decision to the extent it grants the inconsistent application.

The Michigan DOT requests that certain conditions be imposed for the protection of MI. These conditions assume that GTW would be able to consummate the transaction and therefore, that MI would need protection. The conditions would grant MI trackage rights over a portion of the new system and require DTI to be merged fully into GTW within 5 years.

MI believes that if GTW is able to consummate the transaction, DTI would become a hostile connection due to GTW's ability to serve Chicago. Therefore, it requests what it calls "minimum protection" consisting of four conditions, which are discussed later.

CP argues that the Administrative Law Judge erred by not permitting consummation of the joint application once finding it in the public interest. CP believes that the Administrative Law Judge's action in supplanting the private initiative of the joint applicants and Pennco for GTW is contrary to congressional policy stated in the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act). It also objects to the finding by the Administrative Law Judge that the $30 million purchase price negotiated between N&W, B&O, and Pennco is a reasonable price for the inconsistent applicant. CP objects to the Administrative Law Judge's finding that GTW's operations are in the "private sector" of the economy. CP argues that the inconsistent applicants' ownership by the Canadian Government makes that proposal a governmental undertaking.

REPLIES

The joint applicants contend that the evidence of record does not support a finding that its proposal substantially reduces competition. Further, any anticompetitive effects of the joint application are outweighed by other public interest criteria: financial strength of the applicants, shipper opinion, the likelihood of consummation of the transaction, the future separate identity of the acquired carrier, and the change from noncarrier to carrier ownership.

It is also argued by the joint applicants that their operational nochange position does not preclude approval of their application. It is contended that as long as the planned consolidation is not contradictory or hostile to the public interest, it must be granted. Finally, N&W and B&O state that the Administrative Law Judge's consideration of their proposal did include an evaluation of both the short-term and long-term effect of the transaction and was therefore legally sufficient to warrant the grant of their application.

GTW in its reply has taken an opportunity to restate its case in totality. Although a portion of the reply could be stricken, to do so would serve no purpose as it is merely redundant and will not prejudice any party.

It is stated that the Administrative Law Judge erred in finding the joint application was in the public interest. Once this finding is corrected, GTW contends it will dispose of opposition arguments that the joint applicants should have an opportunity to consummate their contract with Pennco. Next, GTW argues that the Commission has a responsibility to approve the transaction, among competing transactions, that will result in the best use of transportation facilities. It then compares its proposal and the joint applicants' proposal with respect to: competition, continuation of essential services, opportunity for efficiencies, elimination of redundancies, ability of the consolidated system to attract business, financial viability of the consolidated company, and environmental factors. Included in this litany are factors we consider under 49 U.S.C. 11344. These are the effect of the transaction on the adequacy of transportation, the inclusion of other carriers, fixed charges, and the interest of carrier employees.

In reply to opposition contentions that the $30 million price is unreasonable, GTW would have us maintain some fixed price if the joint application is also approved. If the joint application is denied, GTW argues that the Commission should defer a finding of

reasonableness concerning the purchase price until it has had a chance to negotiate with Pennco for the sale of DTI.

GTW contends that the protective conditions sought on behalf of MI are not justified since they seek to expand, not protect, MI's traffic base. GTW contends that MI does not provide essential rail service and that any traffic diversions that it may suffer would be because the new consolidated system provides better and essential service.

GTW rejects the DTSL plan to make its proposal to purchase DTI and DTSL nonseverable. Making the DTI purchase contingent upon the DTSL purchase would allow an adverse party to dictate the transaction's success.

Although not filing exceptions, RLEA has filed a reply. It restates the labor organization's basic neutrality as to the two competing applications but notes that it was most impressed with GTW's forthright disclosure of its intentions with regard to impact on employees. It states that it has conducted bargaining sessions with GTW negotiating needed modifications of New York Dock conditions. By petition filed October 26, 1979, RLEA and GTW jointly sought to reopen the record for the introduction of the finalized labor agreement. This agreement is discussed later in the decision.

CN argues that its ownership of GTW should be a positive factor in the evaluation of the GTW application. CN states that its best interest is in promoting and preserving the health of its United States rail subsidiaries. Further, it contends that Congress never intended to preclude foreign investment in the United States rail system when it stated in the "declaration of policy" set forth in section 101(a) of the 4R Act that the U.S. rail system should be "viable in the private sector of the economy

DISCUSSION AND CONCLUSIONS

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This proceeding does not involve merely a selection between the applications of the joint and inconsistent applicants. We must carefully apply accepted principles and determine whether one or both of the proposals before us is consistent with the public interest. Southern Pac. Co.-Control-Western Pac. R. Co., 327 I.C.C. 387, 397 (1965).

The joint applicants have argued that approval of their application would stabilize DTI and assure that it would not

become a serious financial problem for the rail industry. It is argued that equal control by two competitors protects against any temptation for a single owner to harm the railroad to its own advantage. N&W and B&O believe that their proposed transactions is not anticompetitive; they merely seek to protect valuable interchange traffic which they now share with DTI.

The Administrative Law Judge found that the primary application would help each applicant neutralize the other as a potential sole owner of DTI, and keep Southern from gaining direct entry into the Detroit area. Also, GTW would be prevented from expanding southward. Because of these findings, in part, he stated that the short-term benefits to N&W and Chessie of an unchanged DTI would support realistic objectives and the Administrative Law Judge evaluated the application on this basis.

Although these occurrences may be beneficial to N&W and B&O from business standpoint, they do not, standing alone, demonstrate that the proposal is in the public interest. In considering the public interest, we must consider the interest of carriers, shippers, and consumers, and weigh competing interests where conflicts occur. Competition is to be protected, where possible, although this does not necessarily mean that particular competitors are to be protected in every instance.

Primarily, we reject the notion that a rail consolidation may be in the public interest for the "short term." The joint applicants' proposal is not an application to acquire control of DTI for a limited period of time. We cannot base our analysis upon an assumption that the applicants may divest themselves of their interest in DTI at some future time. Issues raised by the instant proposal must be adjudicated in this proceeding.

We feel that the Administrative Law Judge's subsequent analysis of the transaction is more to the point when he states that the joint applicants' proposal does not stand examination either as a practical matter or as a matter of public (regulatory) desirability. Further he stated that looking beyond the short term requires acknowledgment of the clear possibility that rationalizations in the operations and policies of DTI to the advantage of one or another of its parent (N&W and B&O) with a resulting anticompetitive effect will take place. In fact, the Administrative Law Judge qualified his public interest finding basing it solely upon the submitted "no-change" operational plan.

This "no-change plan promises that DTI would continue to act as an independent and competitive railroad even though owned by two of its chief competitors. The evidence indicates that such a supposition is unsupportable in fact and contrary to the interests of the joint applicants.

COMPETITIVE CONSIDERATIONS

Various parties participating in the consolidated proceedings have raised allegations that the joint application is anticompetitive. Although the Administrative Law Judge found the proposal did have anticompetitive tendencies, he stated that no monopoly would be created in the Detroit-Cincinnati corridor and other beneficial factors relating to the proposed transaction outweigh the negative effect on competition. We disagree. The Commission has an obligation to consider the competitive impact of a proposed transaction. Port of Portland v. United States, 408 U.S. 811, 841 (1972); Denver & R. G. W. R. Co. v. U.S., 387 U.S. 485 (1967); McLean Trucking v. U.S., 321 U.S. 67 (1944). The 4R Act states that the Commission shall "foster competition among all carriers by railroad and other modes of transportation" (section 101(b)). However, a transaction with certain anticompetitive effects may be approved by the Commission if it has other facets which are in the public interest and outweigh the negative effect on competition. In empowering the Commission to authorize mergers, Congress "did not import the general policies of the anti-trust laws as a measure" of the permissibility of such authorizations. McLean Trucking, supra at p. 85. It was recognized that competition among carriers is a significant factor in the attainment of the objectives of the national transportation policy. The Commission must estimate the scope and appraise the effects of any curtailment of competition which may result from the proposed consolidation. However, this must be considered along with the advantages of improved service, safer operations, lower costs, and other factors to determine whether the consolidation will assist in effecting the overall transportation policy.

The Supreme Court held in Seaboard Air Line R. Co. v. U.S., 382 U.S. 154 (1965), that the Commission need not determine whether the proposed merger absent Commission approval would violate section 7 of the Clayton Act. The market criteria of Brown Shoe Co. v. United States, 370 U.S. 294 (1962), can be applied only with great caution and substantial qualification. The Supreme Court's analysis