Business Notes Antitrust

The corporate stationery had been changed. The quarterly report spoke of "a dynamic future" for "two strong, compatible companies." Indeed, the 1983 merger of the Santa Fe and Southern Pacific railways was a done deal. Well, almost done. After pondering the matter for 2 1/2 years, the Interstate Commerce Commission unexpectedly rejected the merger last week, declaring that it would be anti-competitive. Had the deal been approved, Santa Fe Southern would have become the third largest railroad in track miles (25,000), behind Burlington Northern and CSX.

Although the ICC ruling was a shock to Santa Fe officials, the Chicago- based company will not be devastated. Real estate, not railroads, accounted for the bulk of its 1985 revenues of $6.4 billion. The same, however, cannot be said for the less diversified Southern Pacific (1985 revenues: $2.5 billion), which has barely made a profit over the past three years. Before the merger, Southern faced bankruptcy, and that could once again be a possibility.

Still, employees at Southern's handsome brick headquarters in downtown San Francisco were hardly despondent. The two companies had planned to merge their headquarters in Chicago and lay off most of Southern's corporate staff.