Aug 3 (Reuters) - U.S. railroad customer groups have

demanded regulators block or put onerous conditions on the

proposed merger of Union Pacific ( UNP ) and Norfolk Southern ( NSC )

, the Financial Times reported on Sunday.

Seven associations of shippers have expressed concern the

planned deal would significantly increase the power of the

merged railroad to raise prices or reduce service standards, the

report said.

Last month, Union Pacific ( UNP ) said it would buy smaller rival

Norfolk Southern ( NSC ) in an $85 billion deal to create the first U.S.

coast-to-coast freight rail operator and reshape the movement of

goods from grains to autos across the country.

The two railroads are expected to have a combined enterprise

value of $250 billion and would unlock about $2.75 billion in

annualized synergies, the companies said.

Reuters could not immediately verify the FT report.

Norfolk Southern ( NSC ) and Union Pacific ( UNP ) did not immediately

respond to Reuters' requests for comment.

Previously, the transportation division of SMART, the

International Association of Sheet Metal, Air, Rail and

Transportation Workers, said it plans to oppose the merger when

it comes before the Surface Transportation Board for review.

Major railroad unions have long opposed consolidation,

arguing such mergers threaten jobs and risk disrupting rail

service.

Senate Democratic leader Chuck Schumer also criticized the

merger saying the deal would push "us even further down the road

of dangerous consolidation and monopoly power ... This is a

hostile takeover of America's infrastructure."