The Interstate Commerce Commission (ICC) was created in 1887 to regulate the rates and practices of railroads. After decades of monopolistic practices, the ICC was supposed to protect consumers.

Regulatory capture is when the regulatory agency, which is supposed to act in the public interest, becomes dominated by the industry or sector it is charged with regulating.

However, the ICC ended up protecting many of the interests in the railroad industry (and later, the trucking industry).

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The regulatory agency, ICC, in the railroad industry ended up protecting the interests of the industry it was supposed to regulate. The rate setting process disproportionately favored railroad companies, there were barriers to entry for competitors, industry influence within the ICC, and complex rules benefited established companies.

Regulatory Capture in the Railroad Industry