WASHINGTON, D.C. (March 25) — Canadian National Railway Co.’s $3 billion purchase of Chicago-based Illinois Central Corp. cleared a major hurdle today, securing unanimous approval from the U.S. Surface Transportation Board.

The three-member board approved the transaction after the railroads agreed to several conditions designed to alleviate concerns about the potential for reduced competition stemming from the deal, which will create North America1s fifth-largest railroad.

Some rivals and shippers had claimed that the combined Canadian National-Illinois Central could engage in collusive and anti-competitive behavior as a result of the existing Canadian National marketing relationship with Kansas City Southern, which actually competes with IC on several key rail links. The alliance has been in place since April 1998. CN and IC recently agreed to an arrangement with National Industrial Transportation League, an association of shippers, intended to assure effective competition.

CN chief Paul Tellier said the deal would improve his company’s ability to compete with the four largest U.S. railroads — Union Pacific Corp., Burlington Northern Santa Fe Corp., Norfolk Southern Corp., and CSX Corp.

CN operates approximately 15,300 route-miles of track in eight Canadian provinces and six U.S. states, with principal routes to every major metropolitan area in Canada and to the major U.S. rail hubs of Buffalo, Detroit, Duluth/Superior, Wis., and Chicago. CN is North America’s only transcontinental railroad, and Canada’s largest railroad serving all five major Canadian ports on the Atlantic and Pacific Oceans and the Great Lakes.

Illinois Central, whose principal subsidiary is the Illinois Central Railroad Company, operates approximately 3370 route-miles of track running north-south between Chicago and the Gulf of Mexico, and east-west between Chicago, Iowa and Nebraska. IC’s main north-south route reaches the major metropolitan areas of St. Louis, Memphis, Tenn., New Orleans and Baton Rouge, La. IC’s east-west route extends from Sioux City and Council Bluffs, Iowa, to Chicago.